A recent court ruling forcing a carrier to accept a LTD claim is offering advisors a new tool to sell coverage once considered redundant
Filling the group gap
A recent court ruling says less about insurers having quick triggers when it comes to claim denials and more to do with providing advisors with another prospecting opportunity
(By Will Ashworth)
A ruling by the Nova Scotia Court of Appeal that upheld the trial court’s decision that Industrial Alliance had breached its duty of good faith to a group long-term disability policyholder by providing rehabilitation services to the insured and then withdrawing them turns out to be less about denying claims and more about advisors filling the gap between group and individual coverage.
“I’m not sure I’m in a position to comment on whether in fact insurers are denying more claims then they use to,” Halifax lawyer Patti Mitchell, a specialist in disability claim litigation for insurance companies, told LHP. “I don’t know what the statistics are on that but what I do see in my own practice is a significant increase in the number of claims going into litigation and from my perspective on the litigation side is an increasing numbers of claims which are in my view ‘skeptical’ to say the least.”
One theory why this is happening is that the number of law firms representing plaintiffs is seeing healthy increases in Nova Scotia and across the country. Insurance carriers, in Mitchell’s opinion, are denying claims at the same rate they always have but more claimants are choosing to fight those denials.
But that’s not what should be important to advisors.
What’s more important here is that individual LTD provides better protection than group LTD insurance for the average employee and if they can afford it, they could be better covered by having both in place.
“Looking at a side-by-side comparison of an individual disability plan versus group LTD plan, you own and control an individual plan,” certified health specialist Ken MacCoy told LHP. “Whereas, if you leave your employer, you also leave the group LTD coverage behind.”
Besides portability, MacCoy suggests two other reasons group LTD can’t hold a candle to individual plans.
“The definition of disability is better on an individual plan and often includes either a 'regular occupation' or 'own occupation' with a benefit period to age 65.. Whereas group LTD only provides a two-year 'regular occupation', followed by an 'any occupation' definition plus the benefit period may be limited to only 2 or 5 years. ” said MacCoy. “ Also, the benefit amount could be as limited to 60% as opposed to an individual plan where it’s usually higher at 66.67%. On cost a group LTD plan is obviously lower but you get what you pay for.”
So, the next time you come across someone with a group LTD plan remember to ask if they also have an individual plan. If they don’t, it’s time to fill the gap.
A recent court ruling says less about insurers having quick triggers when it comes to claim denials and more to do with providing advisors with another prospecting opportunity
(By Will Ashworth)
A ruling by the Nova Scotia Court of Appeal that upheld the trial court’s decision that Industrial Alliance had breached its duty of good faith to a group long-term disability policyholder by providing rehabilitation services to the insured and then withdrawing them turns out to be less about denying claims and more about advisors filling the gap between group and individual coverage.
“I’m not sure I’m in a position to comment on whether in fact insurers are denying more claims then they use to,” Halifax lawyer Patti Mitchell, a specialist in disability claim litigation for insurance companies, told LHP. “I don’t know what the statistics are on that but what I do see in my own practice is a significant increase in the number of claims going into litigation and from my perspective on the litigation side is an increasing numbers of claims which are in my view ‘skeptical’ to say the least.”
One theory why this is happening is that the number of law firms representing plaintiffs is seeing healthy increases in Nova Scotia and across the country. Insurance carriers, in Mitchell’s opinion, are denying claims at the same rate they always have but more claimants are choosing to fight those denials.
But that’s not what should be important to advisors.
What’s more important here is that individual LTD provides better protection than group LTD insurance for the average employee and if they can afford it, they could be better covered by having both in place.
“Looking at a side-by-side comparison of an individual disability plan versus group LTD plan, you own and control an individual plan,” certified health specialist Ken MacCoy told LHP. “Whereas, if you leave your employer, you also leave the group LTD coverage behind.”
Besides portability, MacCoy suggests two other reasons group LTD can’t hold a candle to individual plans.
“The definition of disability is better on an individual plan and often includes either a 'regular occupation' or 'own occupation' with a benefit period to age 65.. Whereas group LTD only provides a two-year 'regular occupation', followed by an 'any occupation' definition plus the benefit period may be limited to only 2 or 5 years. ” said MacCoy. “ Also, the benefit amount could be as limited to 60% as opposed to an individual plan where it’s usually higher at 66.67%. On cost a group LTD plan is obviously lower but you get what you pay for.”
So, the next time you come across someone with a group LTD plan remember to ask if they also have an individual plan. If they don’t, it’s time to fill the gap.
