Small words big difference

Most people buy life insurance as soon as they have kids. Far fewer shell out for a disability policy, even people whose income keeps a roof over their family’s head and food in their bellies. To most people (and employers that provide benefits), a disability insurance policy is a luxury item. Yet some experts consider disability insurance more important than life insurance: With so many advances in life-sustaining medical care, you arguably have a much better chance of becoming disabled than dead. Disabling injuries that cause people to drop out of the work force are actually quite common.

If you have a disability insurance policy or are considering buying one, pay attention to how it defines “disability.” Small words can have big money significance. A recent decision out of California arose from a dispute over whether the insurer owed benefits to an insured that could not perform her “usual” job or in the “usual way” or whether they only owed benefits to an insured that could not perform “any” job. UP weighed in. Turns out, the policy’s overly restrictive language violated California law.

The court reasoned that because most consumers don’t read or understand the meaning of disability policies, it’s imperative that the Insurance Commissioner review disability policies before approving them for sale. But the reality is, none of the 50 states’ commissioners currently have the resources to police the wording in every contract that’s on the market in their state. UP advocates for fair and plain language in insurance policies, and supports adequate budgets for Insurance Commissioners.

We urge consumers to be careful: If you’re a surgeon, don’t buy a policy that won’t pay benefits if you can no longer operate but can still flip burgers. Find a reputable agent or broker to help you buy the right policy or ask the right questions about options your employer may offer.