Some clauses in a long term disability insurance policy can actually favor the claimant. Some policies have a Salary Percentage Requirement included in the any occupation definition of disability. This provision in the policy is the requirement that your insurance company can’t just say that you qualify for any job at any wage and deny you disability benefits based off of that. In most cases that percentage has to be 60-80 percent or more of the income that you were earning in your previous position.
For example, let’s say that a registered nurse was making $70,000 a year and started suffering from a disability that prevented her from continuing in the position. The insurance company would not be able to take her lower-level office and administration skills and say that she doesn’t deserve benefits because she can just go get a receptionist position for $24,000 a year because that’s way less than 80 percent. Naturally, though, it’s not quite that straightforward.
How does the Salary Percentage Requirement Work?
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The first thing that you need to know is that the salary percentage requirement doesn’t come into play until after you’ve received disability for 24 months under the “own occupation” provision. It’s only after you have to qualify for the “any occupation” requirement that this becomes an issue.
So, right up front, it’s not something you need to worry about for two years if you’re just now applying for disability. That being said, it’s important to talk to your lawyer about this requirement because sometimes insurers will attempt to bend the law and argue that the 80 percent should be based off of the last several years of your employment rather than just what you made at your last job. If you recently had a raise or promotion, this can be a big blow.
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The other thing to know is how far that 80 percent actually goes. If you’re a high-level executive working for a million dollars a year, the 80 percent rule may not apply. How do you know? By talking with an experienced disability attorney about the specifics of your case under ERISA law. Marc Whitehead and Associates has over 20 years of experience in ERISA disability law and litigation.
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