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LTD Contracts Should Never Include These 10 Features

By Keith Mangrum 12:03 pm MDT 9/18/2020

Selling in the healthcare professional disability insurance marketplace can be challenging in today’s highly competitive environment.

It’s important to recognize that some commercial carriers may use cost containment provisions, in the form of subjective and restrictive contract language, to enable aggressive pricing for healthcare professional group long-term disability (LTD) plans. These contract provisions can:

  • Prematurely terminate a claim
  • Reduce the expected benefit amount

Keep in mind, when a physician, dentist, surgeon, or other healthcare professional buys LTD, they are buying their next paycheck. For a doctor who experiences a disabling event, nothing is worse than discovering that the claim experience and benefits they receive are vastly different than what they expected.

Comparing healthcare professional group LTD contracts from different carriers can illustrate the difference between what a group thought they bought and what they actually bought. While sufficient for other workers and professions, these ten traditional features are harmful to healthcare professionals at claim time, and should never be included in a group LTD contract for healthcare professionals: 

  1. Non-specific definition of occupation and duties
  2. Offsets for lagged income
  3. International travel/residency restrictions
  4. Part-time work requirement
  5. Maximum capacity language
  6. Mandatory rehabilitation
  7. 40-hour work week limit
  8. Self-reported symptom limitations
  9. 24-month lifetime aggregate mental illness & substance abuse limits
  10. Recommended treatment requirement

A good practice is to provide an audit of client or prospect contracts to identify whether they contain these detrimental provisions.

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