By: Barbara Novak

  The bad news is that you've been diagnosed with a long-term illness. The good news is that you've got disability insurance. The bad news is that it doesn't offer the degree of protection that you were counting on.
  What happened to a woman I'll call Brenda is not uncommon. She started to file a claim after being diagnosed with breast cancer, but found the form so overwhelming that she couldn't complete it during her eight-month treatment, which consisted of surgery, chemotherapy and radiation. "I just couldn't figure it out," she recalls. "I never knew how I would feel from one day to the next so I couldn't estimate how much work I could do." A few years later, the cancer recurred in the form of a brain tumour, and this time she filed a claim. She received $1,000 in each of the first two months. The third month she indicated that she had resumed self-employment 10% of the time. The insurance company informed her that she was no longer eligible for benefits. Her policy allowed for partial loss of time in the case of accidents only; benefits in the case of sickness required total loss of time.
 

Your chances of being disabled in mid-career are far greater than your chances of dying

  With the help of a ferocious advocate, she fought the company and won a settlement for both the first and second episodes. But most people in that situation don't take action, because they lack the resources, especially when their disability has left them in financial straits.
  The lesson is not to assume anything when buying disability insurance. Everything depends on the definitions in your policy, and policies differ widely. Examine group policies very carefully because they leave no room for negotiating. When buying private coverage, Av Lieberman, President of Retirement Education Centre, Inc. recommends that you ask a broker whom you trust to present you with 2-3 proposals from different carriers and then let you make the decision.
  Lieberman points out that your chances of being disabled in mid-career are far greater than your chances of dying. His firm offers life management and transition planning and does not sell financial products. "If you have a choice between purchasing life insurance and disability insurance," he says, "you're better off with disability insurance even though insurance agents are more likely to push life insurance because it's an easier sale involving a simpler policy contract and a generally higher commission."
 

Be prepared for a fight if you ever have to make a claim. Insurance companies seem to operate on the assumption that all claims are fraudulent until proven otherwise.

  Be prepared for a fight if you ever have to make a claim. Insurance companies seem to operate on the assumption that all claims are fraudulent until proven otherwise. The onus rests on claimants to prove their case. And until courts start awarding punitive damages to insurance companies for failing to honour claims, a company has little to lose by doing so. Insurance companies are in the business of risk assessment, so it must be a pretty good risk or else they wouldn't do it. At worst, they will have to reinstate the claimant's benefits and pay court costs.
  Peter N. Downs, a partner with Lerner & Associates in London, Ontario, works exclusively in civil litigation. He's represented many clients who have had problems collecting disability claims. Most have chronic conditions such as fibromyalgia, chronic fatigue syndrome and chronic pain, none of which present the type of objective evidence of illness which insurance companies often demand.
  "A person's rights are dictated by the policy," he explains. "By the time I get involved, there is already some dispute with regard to that contract." He stresses the importance of ensuring that the policy is a good one before you buy it and he cautions that even the best policies may include unpleasant surprises.

Barbara Novak is an award-winning journalist, business writer and alert consumer who lives in London, Ontario.

Check Out These 10 Details When Buying a Disability Policy

1. How does the policy define "disabled"?
   Ideally, it should include an "own occupation" definition which means that you will be entitled to claims if you are unable to perform the particular job for which you are trained. Many policies state that you will receive benefits if you can't work in your own occupation for one or two years, and if you can't work in any occupation after that period. The insurance company can often come up with jobs that they say you can do which may not represent a good income replacement for you.
2. How much are you covered for, for how long, and is it taxable?
   Group policies generally cover people for a percentage of their salaries. If your plan is not indexed to cost of living increases, then any claims will be limited to a percentage of what you were earning at the time you purchased the plan.
3. Will the Insurance Company waive premiums when benefits are payable?
   If so, under what conditions and for how long?
4. Will the premiums ever increase?
   In most cases the premiums will increase according to your age at the time of each renewal period.
5. What happens if you are no longer a member of the "group" in the case of a Group Policy - ie., you lose your job or you resign from membership in an organization?
   In many cases, this will mean that you lose your coverage and, if you reinstate, it may be at a higher fee.
6. How long is the "elimination period"?
   This is the period it takes for the benefits to "kick in." It may be as little as two weeks, or it may be more than a month.
7. Are the terms different in cases of illness and accident?
   Does the policy include partial disability in both cases, and if so, how much?
8. Does the policy specify "disease" or "medical condition"?
   Insurance companies have the right to have you assessed for an Independent Medical Examination by a physician of their choice. It isn't difficult for them to get an independent assessment that supports their position, especially in controversial cases that lack clear organic pathology, such as fibromyalgia, chronic fatigue syndrome and chronic pain. In such cases, if the policy states "disease" you may be out of luck.
9. Who controls the rehabilitation?
   If the insurance company's physician says that you should go on a rehabilitation plan and you don't, you will not be entitled to benefits. The policy should state that any rehabilitation plan must be approved by the Insurance Company and your own doctor.
10. Will the benefits be reduced by the amount of any other disability benefits to which you might be entitled, such as Worker's Compensation or Canada Pension Plan?
    Most insurance companies deduct from your claim any other disability payments to which you may be entitled.