Disability Insurance Presents Issues for Some Policyholders

Chicago, ILMany people know that having disability insurance is generally a good thing. It helps in cases of serious illness or injury that prevents a person from working and therefore causes a financial hardship. But many people are hesitant about disability insurance because of the frequency of stories involving denied disability insurance and disability insurance lawsuits.

Add to that stories about regulators fining insurance companies for allegedly willfully violating the law and it’s easy to see why many people have a negative view of disability insurance. Even when claims are accepted it can take months for the proper paperwork to go through and even longer for monthly checks to start. Policyholders often have to jump through hoops to prove their disability or injury, seeing multiple doctors and sending tons of paperwork.

Those who do not have their claim approved deal with the frustrating process of appealing the situation, only to be told they were denied because the proper paperwork was not sent in or the insurance company’s own doctor disagreed with another medical professional’s diagnosis. Or the insurance company may not consider a condition disabling or may claim the policyholder has not done enough to facilitate recovery. The entire process can be incredibly frustrating, made worse by the fact that the policyholder is usually also dealing with a serious medical condition - including medical appointments and treatments - at the same time and is also off work and facing financial hardship. No wonder so many people become disillusioned with the process.

Lawsuits have been filed against many disability insurance companies, alleging legitimate claims were denied for illegitimate reasons. One such lawsuit was recently filed against Unum by Cynthia Ann Bland, who alleged the company illegally denied her legitimate insurance claim. According to Southeast Texas Record (4/21/14), Bland injured her back while working for the Walker County Appraisal District and had previously had her claim accepted by Unum, only to have it denied later. Her lawsuit, which seeks $1 million, alleges Unum misrepresented her disability. Bland’s claims include breach of good faith and fair dealing, breach of contract and negligent claims handling, among others. (Lawsuit filed April 2, Jefferson County District Court case number D195-557.)

Meanwhile, a judge has reportedly given the go-ahead for military families to file a lawsuit for death benefits for disabled benefits. According to the Associated Press (4/30/14), the plaintiffs alleged Prudential failed to warn veterans that their benefits would expire after they left active duty. The lawsuit alleged that two veterans had post-traumatic stress disorder and should have qualified for two years of benefits following the end of their active duty. Prudential motioned to dismiss the lawsuit, but the judge found that the families may be able to make claims of fraud for failure to warn.