As with all insurance policies, a person who has a disability insurance policy is required to make annual or monthly payments, called “premiums”, to retain their right to claim benefits under the policy. On occasion, a policyholder is unable to make one of these payments or forgets to pay it on time.

Disability insurance is sometimes referred to as “paycheck insurance.” If a person depends on their paycheck for their survival, as most people do, they want to have disability insurance in case they become unable to work due to a disability. If a person becomes disabled and can no longer work, their disability insurance company pays out funds that hopefully equal their take-home pay.

Disability insurance may cover everything from total disability to rehabilitation and even a short period after a person recovers from their disability. Some policies also offer partial disability coverage and coverage for presumptive disabilities.

Disability caused by almost every type of illness or accidental injury can be covered by disability insurance. Some disabling conditions could be covered as well, including complications from pregnancy and childbirth. Conditions that are excluded from coverage, such as certain pre-existing conditions or occupational hazards, are stated explicitly in a person’s policy, so a person should know exactly what the policy covers and what it does not when filing a claim.

Hopefully, a person knows what kind of coverage they want and how much coverage they need, so they purchase the policy that provides the right kind of coverage. Often, disability insurance is offered through a person’s employer or union. The employee must pay the premiums, but the fact that the coverage is offered by their employer makes it easier to purchase a policy.

As with any other type of insurance, disability insurance plans have more expensive premiums if their terms and conditions offer a greater benefit to the policyholder. And plans with less generous terms come with less expensive premiums. Some of the features of a disability insurance policy that affect insurance premiums include the length of the elimination period. This is the length of time that the policyholder must wait after becoming disabled before they start to receive the benefits.

Another feature is the benefit period; this is the period of time for which benefits are paid. Another significant feature is how strict the definition of “disability” is under the policy. Some policies might define a disability very narrowly, so that qualifying is difficult. Other policies may define disability in a way that makes it easier to qualify for the benefits. If a policy offers a short elimination period, a lengthy benefit period and a generous definition of “disability,” it will be more expensive than a policy with a long elimination period, a short benefit period and a narrow definition of “disability.”

What Happens If I Miss a Disability Premium Payment?

If a person misses a disability premium payment, they will typically get a cancellation notice from their insurance company. This notice does not mean that the policy is automatically canceled. Some states have a law that requires insurers to give a policyholder a “grace period” of as much as 30 days after the due date of a premium payment before coverage can be terminated. This gives the policyholder time to make the required payment for up to 30 days after it is due.

If the payment is not made within the grace period, however, disability insurance coverage usually is terminated retroactively to the date the premium payment was due. The insurance company might not even provide any further cancellation notice. This means that if any event that disables the policy holder happens after the due date of the premium payment, the policy would not pay the coverage provided by the policy.

One thing a person may want to have in their disability insurance policy is a waiver of premium for disability. A waiver of the premium is a provision in an insurance policy that says that the insured person, the policyholder, does not have to pay the premium if they are seriously injured.

As noted above, disability policies can have different definitions of “disability”. Policies are also different in terms of when and for how long they will waive the premium in the event that the policyholder becomes disabled. So, a person might be disabled in fact for a period of time, but not disabled within the meaning of their policy. They might still have to pay their policy premiums.

This is why a person would want to have a waiver of premium provision in their policy. It is important to note that insurance companies may charge a higher premium to include a waiver of the premium in the policy.

Usually, a waiver of the premium applies retroactively to the beginning of a disability. If the insured made premium payments while the waiver was in effect, those premiums would be refunded to the insured in full.

Many people choose to have this provision attached as a rider to their disability policy. In the event the person becomes disabled, this rider would allow the policy to continue in full force, with all of its provisions in effect, including any death benefit, dividends, and cash values that it may offer. The policyholder can start making premium payments again when their disability ends.

Can I Regain My Insurance Policy Once It Has Been Canceled?

In most states, insurance companies are not required to reinstate policies once they have been legally canceled. The insurance company may decide whether to reinstate the policy. If a person’s coverage is canceled because they missed a premium payment, some insurance companies may agree to reinstate their coverage as long as the person fulfills two conditions:

  • Makes all past due payments;
  • The person must certify that they are not aware of any changes in their health or physical condition that have occurred since the date the policy was issued or the cancellation date.

The insurance company is going to decide whether it is in the company’s interest to reinstate the policy.

Can I Cancel My Disability Insurance Policy Without Penalty?

Generally, there is no financial penalty for canceling a disability insurance policy. As with most insurance policies, however, a policyholder should provide advanced notice of their intent to cancel their policy to their insurance provider.

It is possible that a person would decide that they no longer need a disability policy. For example, if a person retires and no longer depends on their paycheck for their income, they could well decide that disability insurance no longer meets their needs, and their money would be better spent on a different kind of insurance product, such as long-term care insurance.

If that is a person’s intent, rather than just stopping payments, the best approach would be to contact the company that has issued the disability insurance policy and inform them of the person’s wish to discontinue coverage.

Do I Need An Attorney?

When it comes to disability insurance, the legal issues involved can become complicated. Also, insurance companies can be expected to defend denials of claims and policy cancellations vigorously.

You should hire an experienced insurance attorney who knows how to deal with insurance companies. Your attorney would be able to evaluate your policy and advise you as to what options you have. potential legal claims that you may have involving your disability insurance policy. If an insurance company has wrongly denied your claim for benefits or denied you the right to reinstate a policy, you may have a case against the company for insurance bad faith.

Sometimes an attorney may take a case against a disability insurer on a contingency fee basis. This means that the attorney investigates and evaluates the case before filing a complaint, advances the costs of investigation and litigation, and is paid attorney fees only if there is a recovery. When it comes to dealing with insurance companies, you are well advised to have an attorney on your side.