If you are a dentist, doctor, engineer, lawyer, veterinarian, chiropractor or other self-employed professional or individual, chances are you have purchased long term disability benefits coverage directly from an insurance company. There are important distinctions between a group benefits plan and individual insurance coverage. It is critical to have knowledge of these differences before purchasing an individual long-term disability policy and also, before making a claim for disability benefits under an individual long-term disability policy.

Typically, the benefits provided for under individual insurance policies are significantly greater than the benefits available under group insurance policies. This means that insurance companies may be less inclined to offer you the insurance coverages that you need should you become disabled from your profession.  If you are able to secure individual disability insurance coverage, your benefits may be substantial and insurance companies may also have a greater incentive to deny your claim to avoid paying your benefits.

Consulting with a lawyer before you purchase individual insurance or when you are preparing to submit your disability claim, can often mitigate potential pitfalls later in the insurance application process or in the disability claims process. The type of disability insurance coverage that you ultimately purchase, and the timing of your disability claim can make a significant difference in ensuring your income is protected should you become ill or injured and are unable to work in your profession or run your business. 

At MK Disability Lawyers, we have worked extensively representing professionals and other self-employed people across Ontario in their individual disability insurance disputes. Our three partners have over 50 years of cumulative experience litigating individual disability benefit claims disputes. We understand the nuances and complexities of individual insurance policies and how to effectively and strategically resolve individual disability insurance benefit disputes. 

What are the Differences Between Individual and Group Long-Term Disability Coverage? 

Eligibility for group disability insurance is secured by virtue of an employment relationship or through membership in an association. The insurance company will contract directly with the employer or the association and the eligibility for insurance will be provided for under the policy based on the employee’s hours worked, employment or membership status and other factors. The policyholder of a group disability plan is the employer or the association and not the individual employee or member.

Individual insurance, on the other hand, involves an individual contracting directly with an insurance company for the insurance coverage. The policyholder is the individual who enters into a contract directly with the insurance company.  This is similar to how a person might purchase home or auto insurance.

Medical Underwriting 

Unlike group disability policies, individual disability insurance policies are usually medically underwritten. Medical underwriting is the process whereby an insurance company assesses the risk of insuring the individual by reviewing that individual’s medical information, health status and health history.  The insurance company’s objective is to determine whether it makes economic sense to insure the individual and if so, what premium to charge based on various individual risk factors.

When applying for individual insurance coverage, individuals will be asked to complete a medical questionnaire and depending on how they answer those questions and depending on the amount of coverage being applied for, they may be required to undergo a paramedical examination. A paramedical examination usually takes the form of answering an even more detailed questionnaire and also submitting to basic medical testing administered by a medically trained individual, such as a nurse.  The paramedical examination usually includes, measuring height, weight, blood pressure and can include blood tests and urine samples.

Honesty and full disclosure are key at this early stage to ensure that a future disability or life insurance claim is not denied, later on based on the failure to disclose relevant medical information at the time of the application for insurance. It is very common for insurance companies to deny claims based on misrepresentation. Should this happen to you, it is essential that you contact an experienced long-term disability lawyer to protect your rights.

Policy Riders

Unlike group disability insurance policies where the policy is generally a standard form, individual disability insurance policies allow for some customization of coverage. Usually this customization takes the form of optional “riders” which are essentially benefits that can be purchased to provide various coverages beyond what may be contained in the standard individual disability insurance policy and which may modify the coverage in the standard policy. 

There are many different types of optional riders for individual disability policies. Some examples include:

Own Occupation Rider

An Own Occupation Rider changes the “definition of disability” to relate to the individual’s specific occupation at the time the disability claim is made and for the entire period of disability. This is particularly important for professionals who require a specific skill set in order to perform their occupation, such as a surgeon. An Own Occupation Rider can benefit an individual in cases where they are still able to work in some capacity but are no longer able to perform the duties of their regular or “own occupation”. However, not all Own Occupation Riders provide the same level of coverage.

An Own Occupation Rider will generally contain a clause stipulating whether the individual may remain gainfully employed in an occupation other than their regular occupation after becoming disabled from their regular occupation. The specific wording of this clause will be important if the person wants to modify their work hours or duties to accommodate their disabling condition.  For example, a veterinarian may not be able to examine animals but may still be able to manage the clinic. The individuals “new” role could be considered a “new” regular occupation and could result in a denial of coverage if the individual makes a subsequent claim.

Experienced disability lawyers have developed strategies to combat these pitfalls created by the insurance companies to deny coverage and claims. Any individual policyholder with an Own Occupation Rider as part of their coverage should discuss potential changes to their work duties with a disability lawyer to ensure they preserve their rights to successfully claim benefits under their individual disability policy.

Partial and Residual Disability Benefit Rider

A Partial and Residual Disability Benefit Rider allows for payment of disability benefits when an individual is not “totally disabled” because they are still working in their own occupation but not at full capacity. They might not be able to perform some or all their duties of their own occupation or they cannot perform some or all of their duties of their own occupation, all of the time.

Entitlement to Residual Benefits is often contingent on demonstrating a certain percentage of lost income due to disability.

If an individual is working less or doing different duties, but still earning the same income by taking the same income draw from their business as they did before becoming disabled or if others in the business have been taking over the individual’s duties to ensure that the business does not suffer, there may be no entitlement to Residual Benefits but there may still be an entitlement to Partial Disability Benefits.

The wording of Partial Disability and Residual Disability clauses differ between policies and the specific wording of these clauses may have significant implications for the individual’s entitlement, depending on the nature of the individual’s business or their business/practice model.

Similarly, the way in which an individual’s income is calculated under a specific policy can have a dramatic effect on their benefits entitlement. It is critical to consider how an insurance company is calculating income for purposes of the individual’s disability benefit entitlement as there are often several different variations of income calculation that may be provided for in a single policy; each having very different results in terms of whether the individual is entitled to any benefits and if so, the calculation of the benefit.

Future Income Option Rider

The amount of coverage under an individual policy usually has some correlation with the individual’s income at the time the coverage was purchased. Many long-term disability policies are taken out by professionals and business owners when their practice or business is in its infancy. A Future Income Option Rider allows for the purchase of additional insurance as needed to reflect changes in an individual’s income. This is particularly important for young professionals and new business owners whose income is likely to increase over time. After all, a $1,000 per month benefit is of little value to a dentist who becomes accustomed to earning $500,000-$600,000 per year at the time of disability. 

With this Rider, individuals are guaranteed the option to purchase additional insurance at various times over the life of the policy to cover increases in their income without having to submit to a medical underwriting process each time they wish to increase their coverage. 

Cost-of-Living Rider

A Cost-of-Living Rider indexes the disability benefits an individual is entitled to receive over time. The indexing usually occurs annually and may be tied into the percentages set out in the consumer price index (CPI) or may be a set percentage. Some older policies have cost-of-living indices that might reach as high as 8%. These Riders allow for the automatic increase of benefits annually without the purchase of additional insurance.

Lifetime Benefit Rider

A Lifetime Benefit Rider ensures that the policy continues for the lifetime of the individual and disability benefits will continue to be payable beyond the usual maximum end date of age 65. This is particularly important for professionals and self-employed individuals who have a tendency to work beyond age 65.

Why Are Individual Long-Term Disability Insurance Claims Typically Denied?

Often, like with group disability claims, individual disability claims are denied on the basis that the individual does not meet the various definitions of disability under the policy.  In individual disability policies, there may be multiple definitions of disability used by the insurance company to assess and deny an individual’s disability claim, including “Totally Disability”, “Residual Disability” and “Partial Disability”.  An individual’s claim may also be denied because the insurance company determines that the individual did not suffer a loss of income or was not receiving appropriate treatment or did not provide sufficient evidence to support their claim. 

Unlike with group disability claims, Individual disability claims can also be denied on the basis of misrepresentation. Misrepresentation is when the insurance company determines that the individual failed to disclose their medical information at the time they applied for the coverage and had full disclosure been made, the insurance would not have been offered to the individual.

It is critical that individuals provide full and complete medical information at the time of insurance is applied for to ensure that the policy is not later voided, and benefits denied based on the individual’s misrepresentation or non-disclosure. Once a claim for disability benefits has been submitted by an individual, the insurance company will usually investigate the claim by requesting medical records that precede the date of disability. The insurer will then analyze those medical records to determine whether the insured fully disclosed their health history at the time they applied for the insurance coverage and if not, a claim will be denied on the basis of non-disclosure and misrepresentation.

The law in this area of misrepresentation is complex and the help of a disability lawyer and underwriting experts are essential to ensure a successful outcome when a claim has been denied on this basis.

When to make a Disability Claim under an Individual Insurance Policy

Sometimes it is obvious that you are not able to work and applying for disability benefits under your individual disability insurance policy, the obvious next step.  However, if you are still able to work at some capacity, performing some of the duties of your occupation or if you have not suffered a reduction in your income, you may benefit from consulting with a disability lawyer to determine if or when to submit your disability claim.

Similarly, if you have a slowly progressing disease or degenerative condition, it is important to know when your symptoms and limitations would meet the tests for disability under the Policy and when to file your disability claim. Filing a claim too early or waiting too long to file a claim can have serious negative implications for your finances and for your future coverage under your policy.  Other complex issues such as potential malpractice claims and considerations as to when to sell your practice or your business may also be factors in determining the timing of your disability benefits claim.  A disability lawyer experienced in individual disability policies can help you determine the optimal strategy for your disability claim.

MK Disability Lawyers represents professionals and business owners whose disability claims have been denied by insurance companies. We appeal denials of claims and litigate disputes under individual disability policies regularly and have carefully analyzed individual/private policies from all of the insurance companies providing individual disability insurance. Our knowledge of the claims process, the approach to litigation taken by insurance companies and our extensive experience working with professionals and self-employed individuals, puts us in a unique position to identify strategies to combat inappropriate benefit denials.

Ontario Long-Term Disability Lawyers Providing Experienced Representation for Individual Policy Claims & Appeals

Facing a denial or termination of benefits coverage as an individual long-term disability policyholder can be a particularly isolating and demoralizing experience. At MK Disability Lawyers, we have the skills, compassion and the depth of understanding necessary to represent professional and self-employed clients facing all of Canada’s major providers. We bring knowledge from both sides of these disputes that enables us to anticipate the challenges the providers will use to deny or terminate a claim and prepare accordingly. We have offices conveniently located in Toronto and Markham, and can also meet with clients remotely. To arrange a complimentary consultation with one of our experienced disability lawyers, please complete the online form, or call us at 844-697-4600.