Don't be blamed for disability denialsArticle added by Frank N. Darras on March 12, 2010
Frank N. Darras

Frank N. Darras

Ontario, CA

Joined: February 18, 2010

My Company


As a disability insurance agent, you are in the trenches day in and day out selling disability coverage to your clients. They understand the need for the coverage and have trusted you to find the right policy and carrier for them. What happens then if their claim is wrongfully denied? What do you do if they come to you looking for answers?

First and foremost, let's look at the application process.

A major reason for claim denials has to do with misstatements and/or omissions which have been made on the application by the claimant. Many times, misstatements have been unintentional due to the inadequate wording of a question. Experts agree that disability claims start with the application. Some critical areas of the application which affect a claim and could be answered incorrectly, or dishonestly, have to do with:
  • Occupation/duties
  • Health
  • Income
  • Other pertinent facts such as hobbies, etc.
It is your duty, not only to the insured but to the carrier, to record all answers exactly as they are answered. Do not write answers down in such a way so that the policy would be issued as "applied for" (without a declination, rating or exclusion). Do not try to interpret a question on the application for your client; if you are unsure of the intentions of the question, call the carrier and record the conversation.

What about those claims which have been inappropriately denied? For instance, a claim denied because of contract language? An example of this:
  • A policyholder submitted a claim, unaware the policy had lapsed due to a change of address. The claims department initially denied the claim due to the policy not being in force. What happened? The contract clearly stated that all policy changes must be submitted in writing. The claimant's agent verbally made the change and the submitted change was incorrect.
In a case such as this, the agent was going above the call of duty (in their mind) by calling the carrier with the address change and it ended up costing their client time and money in a lawsuit. Do you think that the agent retained the client? Know the policy language at all costs and follow up changes to the carrier in writing.

Don't overstate the occupation definitions. It is your duty to help your client understand that the words "own-occupation" should not be taken for granted. Just because these words are physically on a proposal does not mean that they are reviewing the best definition of total disability available. Make sure that you are educating your client about the definitions and how they are affected by them. The last thing you want your client to think is that they are covered under own-occupation until age 65 when, in reality, the policy has multiple definitions and periods of payments. For example:
  • A policy where the own-occupation total disability is paid for a period of time and at the end of that time the policy definition changes to a regular occupation or any occupation definition
The bottom line is to know the language of the policies you are selling and disclose the information to your clients. It is imperative that you take the time to educate your client about the ins and outs of their application and policy to avoid being blamed if a claim is denied.

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