Whether you work for a company that provides long-term disability insurance or own an individual policy, the insurance company may elect to stop paying long-term disability to an employee for a number of reasons. Employers and their insurers both have certain policies in place to protect themselves, and they may exercise their legal rights to prevent long-term disability insurance abuse or fraud, which drains insurers' coffers and puts tremendous strain on employers. Even if you're not cheating the system, there are other situations in which it's permissible for your company to cease funding this benefit.
There is an extensive list of pre-existing conditions to which a disability may be linked, and if the insurance company-hired physicians make such a connection or discovery, the policy will be void or nullified. Furthermore, any conditions discovered that were previously unknown to the applicant may also preclude him from maintaining a policy. The theory is that even though the condition was unknown at the time of the long-term disability insurance policy purchase, the fact that it existed before or at the time of purchase means the insurer is not responsible for making any payments to the claimant.
Failure to Satisfy the Company Disability Physical
If you're looking to make a long-term disability claim, you'll need much more than a note from your doctor. Most companies will demand that the claimant undergo a physical test to determine if a disability is in fact present. If she decides you're fit to return to work, you could be facing an uphill battle. Again, this physician represents the insurance company, so it's not uncommon for battles of alleged bias to ensue.
Most long-term disability coverage is good for a limited term of between two and five years, although some policies will pay until you reach age 65, also known as the “maximum benefit period.” Once you've exhausted your length of coverage, you'll no longer receive disability payments.
Mental/Nervous Condition Limitations
One of the most contentious issues among mental health workers and insurance companies is that the majority of claimants who become mentally disabled by diseases or issues such as depression, bipolar disorder, or even more extreme problems, will cease to receive long-term disability payments after an unusually short period of time -- typically limited to between just one and three years. While mental health advocates deride this practice as unfair and biased, insurers maintain their right to impose these coverage limits by asserting that fraud is most commonly found in mental illness claims.
One sure-fire way for an insurer to stop paying long-term disability claims is the discovery of insurance fraud -- in other words, the discovery that you've violated some term of the policy agreement. The most common ways to violate this agreement include providing false or inaccurate information to the insurer, or to be caught performing things someone with a disability would be unable to do. In fact, many insurers will hire investigators to conduct surveillance on disability claimants and then often discover them engaging in athletics or other activities their injuries would preclude.
Failure to Make Payments
If you don't hold up to your end of the bargain by paying your premiums, the insurance company has no duty to pay on any long-term disability claim. While this should come as no surprise, some people still attempt to collect.
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