ERISA vs. Private Or Individual LTD: Important Differences

Privately purchased and owned disability insurance is a policy that you purchase yourself, usually through an insurance agent.

You can work closely with an experienced disability insurance agent to determine what benefit level you need, and design a policy that is suitable for you and your family.

If you hold advanced degrees or work in a specific occupation, you will want to purchase an "own occupation" policy. For example, if you are a concert violinist, you are buying an insurance policy to protect your ability to play the violin and be paid for your ability to perform as a concert violinist.

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Be aware that these contracts will be medically underwritten, and that statements made in the application must be truthful, and information about one's medical history revealed, or at the time of claim, it may be subject to consideration of a term called rescission, where the insurance company tries to get out from the contract, based upon alleged misrepresentations of omissions of medical or other information at the time of underwriting.

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Privately owned long term disability insurance policies are enforceable through the same legal system as any other insurance contract. This is far better for the policy owner, as fighting a denial or termination can proceed without being subject to the many restrictions that are imposed on ERISA policies. Litigation can take place in state and federal courts and can take place before a jury.

LTD benefits from a private disability policy are generally tax free as the policy is purchased with after-tax dollars. Be careful not to pay the premiums through a business, potentially removing the tax-free status of the benefits.

Private disability policies are sold based on the specific needs of an individual and offer better coverage as a result.

Frankel and Newfield represented a successful New York dentist whose private disability insurance benefits were terminated by Trustmark. Learn how we got him back on claim.

We Overturn Termination of Mass Mutual Private Disability Policy for Financial Advisor

Mass Mutual Private Disability Policy for Financial Advisor

A financial advisor had a robust practice, preparing and presenting two to four educational seminars weekly, managing clients, prospecting for new business and accomplishing all the tasks necessary to maintain her practice. When she became disabled by depression, she found it impossible to make client phone calls, missed deadlines, could not attend office meetings and was unable to generate new business. Her supervisors reassigned a major account that she had under her own management for many years. That added to her depressed state.

Without the ability to present a confident and professional appearance and manage complex analysis, she had no choice but to file for disability. She was in her mid-fifties, a time when financial professionals and others are heading into their peak earnings years.

Frankel & Newfield was retained when benefits from her private policy with Mass Mutual were terminated based on a medical review performed by a doctor retained by the insurance company, who performed neuropsychological testing and determined that her claim was no longer valid. They also accused her of deliberately not performing well on the test.

She had been a highly functioning financial advisor, but a series of significant events caused her baseline depression to become disabling. Mass Mutual claimed that her ability to travel to her son's wedding in Ireland, where she barely participated in any of the celebration, and then to travel to Florida to be present when her elderly mother died meant that she was able to return to work.

To combat the wrongful determination reached by Mass Mutual and its doctor, we engaged an expert to perform a review of the test materials and conduct an interview with our client, to gain a more comprehensive perspective on the issues.

Following his analysis, including the raw data from the testing, we successfully overcame the argument that our client had not provided appropriate effort during the testing, and that her limitations significantly impacted her functionality to such a degree that it prevented her from performing the array of duties which her work required.

Her depression impacted her energy level, cognitive abilities, and her ability to interact normally with people, including potential clients. We demonstrated the powerful connection between her limitations and her occupational requirements, which compelled Mass Mutual to appreciate the ongoing nature and severity of our client's impairment.

Our client is now paid to current status and she continues to remain on claim.

By engaging and working closely with the appropriate expert to consider the issues, and in developing the appropriate rebuttal issues, we were able to overcome a case that was presented to us with great challenges. In attacking the process engaged in, and by utilizing our experience in the trenches of how the insurers operate, we were successful in getting our client back on claim.

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ERISA disability insurance is part of a benefits package that you receive from an employer.

In the past, each employee had the same type of policy, but today many disability insurance companies offer different levels of protection. This is in part to allow for more flexibility for the employee, but unfortunately it often leads employees to underestimate the importance of disability insurance and they find themselves with less coverage than they need.

ERISA or group disability insurance is usually less expensive than a privately purchased policy.

Group disability benefits are often taxable as ordinary income. Some policies permit the premiums to be paid for by employees with after tax dollars, making those benefits not taxable.

If you have to file an appeal or fight a termination from a group or ERISA policy, you must do so within the internal appeals process of the disability insurance company. You can only sue in federal court after exhausting any internal administrative appeals. This is a significant distinction with private policies that are not through one's employment.

Whether you have a private or group disability policy, if you are facing problems with your disability insurance claim, you need to contact an experienced disability insurance attorney who can help you fight the insurance company and protect you and your family. If you have questions, call our office today. The call is free, and we welcome your inquiry.

Justin C Frankel

Written By:

Justin C. Frankel

Disability Insurance Attorney