Are Disability Benefits Paid for Life?
By: Michael B. Murphy, QC, Senior Partner
Disability benefits are paid pursuant to an Insurance Policy. The Insurance Policy of a car will pay differently than a long-term disability policy.
A long-term disability policy will pay you if you are unable to complete the “regular duties” of your employment for 2 years. After that you must be disabled from all other forms of occupation. Also, you still get the benefits if you take on a part time job after this first 2 years. There is a clause outlining how you are paid with the deduction of part time income. If you remain disabled after 2 years and you cannot do a job that is “commensurate” with the previous one you had then you are still paid. In other words, if you are a nurse and disabled but you can do a job that pays ¼ of that at a corner store. That is not “Commensurate”. But if you can work in an insurance company or with a doctor’s office and earn close to the same income then that is “Commensurate”. Long term disability policies normally pay to the age of 65.
Regarding the auto insurance, you are paid for the first 2 years, if you cannot complete the essential duties of the job that you had at the time of the accident. Essential duties are different than regular duties. If your job is modified on your return to work and you go off work months later then you still qualify because you never returned to the “essential duties”. After 2 years you are paid only if you cannot do any job for which you have education, training, or experience. So, if you are a mailman and you have a severe limp, then after 2 years you cannot return to being a mailman. But if you have qualifications to be a bookkeeper and earn the same about of money as a mailman, or close to it, then you are not paid. There is a provision for part time work as well.
The wording of the policy is such that if you qualify for payment after 2 years you are paid until the day you die unless you become disabled for other reasons. This is very valuable. The downside of this is that the insurance companies of the car that hit you try to reduce the long-term payments over your lifetime against all your claim. This is a “(cox vs. carter)” order. It’s a deduction against all of the claims, not just loss of income. In fact, if the monies are held in trust by the insurance company of the car that hit you. These are the monies that you receive from your weekly indemnity. It is rarely done but it hangs out there as an incentive to settle. A long-term disability policy pays usually only to age 65. Also, if you settle a claim against a third party your long-term disability payments may be cut off pursuant to the “subrogation” clause.
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