You’ve heard it many times in your life; your buying a new car and your pitched insurance for a few extra dollars to protect your payments if you get sick. You may have group insurance through an employer that provides a percentage of your income in the event you cannot work due to illness. Your watching television and a commercial plays suggesting you buy extra protection. You watch with alarm as a guy collapses on a street.
I once held life and disability broker licenses and went through extensive training to understand and sell the product. I was encouraged to review a clients current policy – and give it to them straight about what they truly had – which occasionally resulted in a pitch for additional coverage. My intentions were pure yet I was blind. “What goes around” certainly came around.
Please don’t misunderstand me.
Insurance sales is as noble a career as the next and I know great people on that side of the industry. I’m also not writing to suggest all disability insurers or their policies are rubbish. Protecting you and your family against risk is smart.
Many people live bi-weekly according to pay cycles, and should anything interrupt it, financial trouble is not far away. It may be hard to admit, but a great number of people are a measly few paydays away from bankruptcy. So, if illness strikes there’s some relief because the car payment will be met…or at least you’ll get 60% of your gross income through the group policy right?
Well, maybe. But the other pertinent question is when?
And here’s where it gets real folks – Insurance companies do not make money by paying claims. They will have you jump through plenty of hoops to get what you believed was rightfully yours.
I know a couple who purchased credit protection on their car loan. Lets call them Dave and Trixie for discretionary purposes. When Dave and Trixie signed the papers for their car, they had no idea what was on the horizon. The banker was only too glad to accept the commission on the insurance sale, and the insurance company glad to accept their premiums. Dave and Trixie were glad to be “covered”.
Months passed and then the unthinkable happened…. Dave had a stroke that robbed his ability to ever work again. So you’d think the car payment was at least one bill they didn’t have to worry about right? Wrong.
It took them seven months to get it approved. Seven months!Imagine the hardship for the average person; forms, telephone calls, multiple doctor visits, delays – in the end, the insurer even tried denying the claim based on the premise that Dave neglected to take ‘proper care in preventing such an event’. The man had a stroke for God’s sake! We could all do better in watching our health, but if that becomes a criteria on the adjudication of claims, why did they accept his premiums?
So why are many disability claims denied on first application? Insurers know that some people will give up and not fight them. They also know these illnesses place them in life’s most vulnerable position. Some people go bankrupt. Some are left in shock thinking their own naivety has betrayed them.
When I got sick, it took six grueling months for my group insurance provider to approve my income replacement benefits. I was single at the time, and were it not for the generosity of my Mother who welcomed me home, I could have been homeless or dead. Plain and simple. Not only did it bankrupt me, I was suicidal. To this very day I have not recovered.
The point to all of this? Please understand that having disability insurance may not automatically or always protect you in a time of need. Understand that many will need to fight vigorously for months leaving them financially and mentally vulnerable. Understand that if there’s a way to deny benefits, some insurers will. Please read and take steps to understand your policies fine print.