Many people have disability insurance through their employer, or have a separate policy to protect them in the event they become disabled. This is an important safety net, since being disabled can simultaneously increase your recurring expenses and rob you of your primary means of generating more income.
Still, every year, millions of people find themselves in this position—and some of them have their disability insurance claims denied outright. In other words, they don’t receive the benefits they were expecting, and have to face those mounting costs alone.
So why is this so common, and what can be done about it?
Why Disability Claims Are Denied
Insurance companies don’t deny coverage for disability because they’re evil or greedy. They do it because they’re a business, and they need to ensure they make money. That means preventing the possibility of fraud or manipulation by consumers (which does happen), and maximizing their ratios of revenue to payouts.
Accordingly, these are some of the main reasons why disability claims are denied by insurance companies:
A lack of medical evidence.
First, you may have to deal with a lack of medical evidence. Insurance companies want to know that you’ve been professionally evaluated, and to a sufficient degree, to determine your disability status. For example, claiming you have depression and are unable to work is likely to result in a claim denial; instead, insurance companies will want to see a formal letter from a psychiatrist or physician detailing how your depression manifests, and what you’re doing to improve. In rare cases, you may provide medical evidence, but be denied because it’s insufficient—either because it’s suspected to be a forgery or because it’s coming from an unreliable source.
You may also face claims denials if you’ve had previous denials in the past. Disability insurance companies like to look for patterns of behavior, as well as the reliability of the people they’re insuring. If you have a long history of trying to qualify for disability payouts, without much strong evidence to back you up, companies may be reluctant to accept your claims.
Current income and working potential.
You may also face scrutiny if you’ve demonstrated an ability to work, or if you’re getting sufficient income through another means. For example, let’s say you have a job that pays $60,000 a year, and you experience an injury that prevents you from being able to work there—or so you claim. You quit that job, and get another job with similar responsibilities at $50,000, but still try to get disability benefits. Almost any disability insurance company would look into this, attempting to determine if you were actually prevented from working at your previous job, or attempting to reduce the payouts they provide based on your current income.
A failure to follow medical advice.
It’s also possible to be denied your claims if you’ve gone to the doctor, but have failed to follow their advice. It’s distressingly common for patients to get solid, specific advice from medical professionals, only to ignore that advice or neglect their potential treatment. For example, if you’re dealing with a leg injury and your doctor tells you that you need to rest in order to recuperate, but you go to work anyway and end up worse, your insurance company may be less likely to approve your claim. You need to make a concentrated effort to get better if you want your claims to be approved.
A failure to cooperate.
Beneficiaries also face opposition from insurance companies if they refuse to cooperate, or make it difficult to get through the various bureaucratic processes necessary to complete a claim. For example, if you refuse to provide the records necessary to prove your work history, or if you’re combative over the phone, your company may be less likely to “play nice” and process your claim quickly. It’s typically best to answer questions honestly, and provide whatever documentation you can.
What You Can Do
If you have disability insurance already, you can prevent some of these motivations for denial by getting the right documentation in place, and preparing yourself for the process of filing a claim in advance. If you’ve already suffered a disabling injury or illness and you’ve had your claims denied, all that’s left to do is try to fight that denial. In some cases, you may be able to provide sufficient evidence or cause to earn those benefits. In others, you may need to consult with an attorney, who will be able to help you fight the denial.
The world of disability and disability insurance can be complicated, but the more you learn about it in advance, the better protected you’ll be. Learn everything you can about your insurance policy, and be prepared for anything.