When you research disability insurance benefits, most of the information you’ll find addresses employer-sponsored disability plans. However, many people, especially self-employed individuals, purchase private or individual disability insurance as a safety net.
You might not realize that private long-term disability (LTD) insurance claims involve a different set of rules than their employer-sponsored counterparts. In this blog, the team at Bryant Legal Group answers five of our clients’ most frequent questions about individual disability insurance.
1. What’s the Difference Between Private Disability Insurance and ERISA Plans?
If you’ve been researching disability insurance claims, you’ve probably read about ERISA (Employee Retirement Income Security Act of 1974), a federal law that governs many employee benefit programs — including LTD plans.
However, ERISA only applies to employer-sponsored benefit programs. If your company pays for your LTD insurance premiums or participation is mandatory, ERISA probably applies to your disability insurance claim.
However, if you purchased your LTD coverage individually or voluntarily, the Illinois Insurance Code and other state laws will typically apply to your claim. Importantly, the claims and appeal process under Illinois law is very different from those under the more insurance company-friendly ERISA.
While nothing compares with a personalized assessment from an experienced disability insurance lawyer, here are some common signs that you have a private disability insurance policy:
- You are self-employed.
- You purchased disability insurance from a broker or carrier who partners with your medical society or bar association.
- You purchased supplemental disability coverage through an insurance broker.
- You pay the entire premium yourself or it’s deducted from your paycheck post-tax.
If you’re unsure whether ERISA or Illinois law applies to your case, please contact Bryant Legal Group for assistance. All initial consultations are complimentary and confidential.
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2. What’s the Process for Appealing a Private Disability Insurance Denial?
You may have read about how you have to exhaust your administrative remedies and complete an insurance company appeal before filing an ERISA lawsuit. Thankfully, this burdensome process isn’t mandatory in a private disability insurance claim.
While your disability insurance lawyer might decide that pursuing the insurance company’s in-house appeals process makes sense, you have the option of filing a lawsuit immediately after receiving a denial of benefits.
Once you file a private disability insurance lawsuit, Illinois’ procedural and evidentiary rules apply. That means you’ll have opportunities to negotiate with the insurance company, present new evidence and testimony, and explain why you’re eligible for LTD benefits.
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3. Can I Request a Jury Trial?
One of the biggest differences between ERISA and private disability insurance claims is the right to a jury trial. If your LTD plan is employer-sponsored, a judge will review your claim — not a jury. However, in a private disability insurance claim, you can request a jury trial.
Many people value the chance to present their case and legal arguments to a jury of their peers. However, you need to make a timely demand for a jury trial. Typically, your disability insurance lawyer will help you navigate these procedural requirements.
4. Can I Get Pain and Suffering Damages for the Insurance Company’s Unreasonable Denial of Benefits?
While the Illinois Insurance Code does not permit compensation for your pain and suffering, it does allow for additional statutory damages when the insurance company denies your claim in “bad faith.” Under Section 155, you can receive no more than an additional:
- 60% of the damages the judge or jury award you at trial
- $60,000 or the difference between the jury award and the insurance company’s settlement offer
You may also be entitled to attorney’s fees.
However, you will first have to prove that the insurance company delays were either “unreasonable” or “vexatious.” If your case involves a bona fide dispute, these statutory damages may be unavailable.
Under ERISA, you cannot file a “bad faith” claim against an insurance company.
5. How Much Time Do I Have to File an Individual Disability Insurance Lawsuit?
Under Illinois law, you typically have up to 10 years to file a private disability insurance lawsuit. However, there is a loophole to this filing deadline.
Insurance companies can insert a different limitation clause in your insurance policy. Illinois courts typically uphold these contractual filing deadlines as long as they are reasonable. For example, the courts will probably uphold a three-year filing deadline, but a 30-day limitation period is unlikely to pass judicial scrutiny.
To protect your legal claims, you should immediately review your LTD policy before you apply for LTD benefits. Note the exact deadlines imposed by your policy and follow them carefully. However, if you’re working with an experienced disability insurance lawyer, they will oversee all of your filing and procedural deadlines.
Bryant Legal Group: Get Answers to Your LTD Questions
At Bryant Legal Group, we’ve been helping disabled individuals get the benefits they deserve for decades. If you have questions about your private disability insurance policy, we would love to sit down with you to help you understand your legal options.
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