When is a person considered disabled? As illnesses and injuries have varying degrees of severity, this question isn’t as straightforward as it may seem at first. Nonetheless, some disabilities are severe enough that disability is obvious. This is called presumptive disability. Disability insurance policies typically include special provisions for these cases.
Total Disability vs Presumptive Disability
In disability insurance, the exact definition of disability matters.
Disability insurance pays benefits if the policyholder experiences a qualifying disability. But what counts as a qualifying disability? Most of the time, it must be a total disability that prevents the policyholder from working. If the policy uses an any-occupation definition of disability, policyholders are considered disabled when a disability prevents them from working in any occupation. If the policy uses an own-occupation definition of disability, policyholders are considered disabled when a disability prevents them from working in their usual occupation – that is, the one they worked in prior to the disability.
However, these aren’t the only options. Regardless of whether you’re dealing with an any-occupation policy or an own-occupation policy, most private disability insurance policies also include a clause that provides coverage in the case of a presumptive disability.
What Is Presumptive Disability?
A presumptive disability is based on the nature of the disability itself rather than the impact on the person’s ability to work. A presumptive disability is one severe enough that the person is considered disabled without needing to show the impact on their job or that they are receiving medical care.
The distinction can make a major difference in the benefits that a policyholder receives.
- Policyholders qualify for benefits regardless of whether they are working. Disabilities often make it impossible for a person to work, resulting in major financial strain. This is a reason why disability insurance is so important. However, disabilities don’t always prevent people from working. Many people who are blind, have lost limbs, or have other significant disabilities are still able to have successful careers. Once policyholders are able to return to their regular jobs after an injury or illness, the disability insurance policy usually stops paying benefits. However, in the case of a presumptive disability, benefits continue. This allows policyholders to return to work – something they may want to do – without worrying about negative financial consequences. This may be especially important when policyholders face additional costs related to their disabilities, such as medical bills and making adaptations to their homes.
- Presumptive disabilities are usually not subject to an elimination period. Normally when policyholders file disability claims, they receive no benefits until the end of the elimination period (also called the waiting period), which is often around 90 days. However, in the case of a presumptive disability, insurers typical waive the elimination period, as per the terms of the policy. This allows the policyholder to start collecting benefits immediately.
- Policyholders may receive lifetime benefits. Once someone qualifies for disability benefits, the benefit period determines how long the person can continue receiving benefits. Some benefit periods last for a set number of years, such as two, five, or 10 years. Others last until the policyholder reaches retirement age – often considered to be 65 or 67. However, if a person has a presumptive disability, he or she may qualify for lifetime disability benefits. Bear in mind, though, that not all policies provide lifetime benefits for presumptive disabilities.
Presumptive Disability Examples
The best way to determine what counts as a presumptive disability is to review your policy. The clause that outlines presumptive disability benefits should also list the conditions.
Common presumptive disability examples include:
- Loss of sight in both eyes
- Loss of hearing in both ears
- Loss of the power of speech
- Loss of the use of at least two limbs (both arms, both legs, or one arm and one leg)
Why Policy Language Matters
Most disability insurance policies include a provision for presumptive disability benefits. Based on this, you might assume presumptive disability isn’t an important issue to consider when comparing your disability insurance options. In fact, the exact language used in the presumptive disability provision is critical. Although most policies include some version of this provision, the details – and therefore the benefits – can vary tremendously.
For example, many presumptive disability provisions waive the elimination period – but not all do. If your elimination period is 90 days and your monthly benefit is $5,000, you’re missing out on $15,000 right off the bat.
Another key consideration is whether the policy pays lifetime benefits for presumptive disabilities. This article crunches the numbers and shows that lifetime benefits can increase the amount policyholders receive by more than $1 million. Of course, the exact increase in benefits depends on a multitude of factors, including the age of the policyholder at the onset of the disability, the age of the policyholder at death, and the monthly benefit amount. However, if a person lives a decade or more past the retirement age – at which point normal disability insurance benefits stop – those extra lifetime benefit payments really add up.
How Would a Presumptive Disability Impact Your Life?
Many healthy people have a hard time imagining they could become severely disabled, but the reality is disability can happen to anyone.
For example, you could be driving home one night when you fall asleep at the wheel and crash into a tree. Imagine you become severely injured and will never regain the use of your legs. In addition, the accident was your fault, meaning there’s no other driver to sue. You’ll have to cover the medical costs and deal with your loss of income. Disability insurance with a presumptive disability provision could be life changing in this situation.
Accidents can occur in other ways, too – for example, if you’re injured while riding a bicycle or on a skiing vacation. Illness can also lead to major disabilities: sepsis can necessitate amputations and some medical conditions can cause vision loss.
When you purchase a disability insurance policy, you don’t know what the future will bring. However, by purchasing a policy with a robust presumptive disability clause, you’ll have financial protection for unthinkable scenarios.
Insurance sales agents can help their clients by highlighting the difference in presumptive disability benefits and explaining why these differences matter. Are you looking for a disability insurance policy with robust presumptive disability benefits? Request a quote.