COMMENTS ON DISABILITY CLAIMS

Waiting Period: Another contractual feature that affects claims is the waiting period. For a disability claim to be payable, the disability period must last longer than the waiting period specified in the contract. An individual may be considered disabled under the definition of disability, but not qualify for benefits because they recover before the waiting period ends.

Coordination: A third clause that can affect the amount of benefits paid is the coordination clause, also called the "All Source Maximum". This provision is designed to ensure that the total income received during the disability, from all group plans and government plans, bears a reasonable relationship to the income the person was earning before they became disabled.

Under this clause, disability benefits from group and government plans are limited to 85% of pre-disability net income for non-taxable plans.(For taxable plans, the co-ordination level is 80% of pre-disability gross income.). If the individual's benefits exceeds this level, they will be reduced so that the total income is equal to the co-ordination level. This most often happens when individuals have more than one source of disability income. However, under non-taxable plans, an individual's personal tax circumstances can trigger the clause, even when there are no additional sources of disability income.

Medical Evidence: Any claim for disability must be supported by medical evidence. That most often takes the form of reports from the individual's physicians, either a general practitioner or specialists.

The role of the physician is to determine the nature and extent of the limitations the individual faces in his or her daily activities, as a result of the condition for which the claim is being submitted. Determining whether the condition qualifies as a disability for insurance purposes depends on the provisions of the contract and on the specific job duties of the individual. This assessment is made by claims specialists.

In assessing medical information, the claims specialist can call on a variety of medical sources, including experienced physicians both on their staff and in private practice across Canada. The specialist can request additional information or, in some cases, order additional tests. The specialist reviews limitations for accuracy. The claims examiner determines if a disability exists under the contract.

Recovery Period: Medical evidence is also used to assess the recovery period for a disability. The starting point is the normal recovery period for individuals with similar medical conditions. Most of the claimants recover and return to work within these normal recovery periods.

Medical complications may arise that can extend. In those cases, insurers consider paying benefits for longer recovery periods, as long as they receive medical evidence that explains why the recovery will take longer than normal.

Claims specialists do not request this additional medical information when first reviewing a claim, because in the vast majority of cases, it would add unnecessary delays and inconvenience for the claimant.

Appeals: Two situations in which a claim will be denied are when the medical evidence does not support the claim, or when the recovery period is shorter than the waiting period under the contract. If an individual is dissatisfied with the insurer's decision, they will review the case, if any new medical evidence is provided. It is particularly important for a claimant to let the insurer know of any new medical evidence on their condition. It will be reviewed as soon as they receive it, to see if it has a bearing on their claim.

Disability insurance should be a critical part of the financial planning process of everyone who is still working.

This information is general in nature, and is intended for educational purposes only. For specific situations you should consult the appropriate legal, accounting or tax expert.