Many Unum long term disability insurance claimants discover that they must apply for Social Security before receiving LTD benefits. The application process can cause painful delays. If and when an application unexpectedly succeeds, claimants discover that LTD payments are reduced. It is a “heads-I-win-tails-you-lose” story, all too common in the insurance industry.
The facts of Dr. McClure’s suit against Countrywide are fairly complicated, but the dispute centers on a supplemental social insurance rider (SIR) and whether contractual language offsetting benefits by Social Security Disability Insurance (SSDI) payments was enforceable. The District Court upheld the offset, which left McClure with no SIR payments after his SSDI began.
So what exactly did Dr. McClure get for the premiums he paid for his SIR? A little bit of bridge financing perhaps, but nothing long term. That’s a hard blow for a man with a traumatic brain injury.
The court reached this result through a straight contract analysis:
• The offset language clearly existed in the SIR contract;
• It was neither ambiguous, nor written in a manner incomprehensible to a reasonable consumer;
• Dr. McClure offered no evidence of other activity leading him to believe that he had coverage after his SSDI payments began.
Unum disability insurance, like many LTD policies, is specifically marketed to professionals, like Dr. McClure, who must climb a steep hill to argue that they did not read or understand the policy.
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The harder question is whether these kinds of provisions in LTD policies should be void as a matter of public policy. Dr. McClure tried this argument without success.
Where is the remedy, then?
In Arizona and other states where strong legal precedent exists to support looking at LTD policies just like other contracts, the solution probably lies with the state legislature. In other jurisdictions, the public policy argument may fare better. In the meantime, however, an insured’s best defense is to read the policy to understand its limitations.