Should I Have LTD Coverage Through an ERISA-Governed Policy or a Private Policy?

Should I Have LTD Coverage Through an ERISA-Governed Policy or a Private Policy?

There are significant differences between long-term disability policies that you purchase privately and those that you may receive as part of your benefits package from your employer. By understanding these differences, you may be able to make a better decision about what type of coverage is right for you and your family.

You can work with an insurance agent to privately purchase an LTD policy that is tailored to your needs. For instance, if you have an advanced degree or specific abilities related to your job, you likely will want to purchase a policy that provides benefits if you no longer can work in your “own occupation,” as opposed to “any occupation.” These policies rely in part on your truthful disclosure of your current health status when you purchase the policy.

Generally, these policies will provide you with better coverage, and if you are denied coverage, you are not subject to the many restrictions that ERISA places on employer-sponsored policies. Although these policies tend to be more expensive to purchase, the benefits that you receive are typically tax-free, since you have paid the premiums for the policies with after-tax dollars.

In contrast, most employer-sponsored policies are more restrictive. These policies usually are subjective to ERISA, which is a federal law that places strict limits on your ability to appeal a denial of benefits. For instance, you must go through an administrative appeals process with the insurance company and exhaust all available remedies before you can file suit in federal court if you receive a denial of benefits. At the federal court level, ERISA generally prohibits the court from considering any new evidence and requires the court to give a great deal of deference to the insurance company’s decision. These and other restrictions can make it far more challenging to obtain LTD benefits under these policies. ERISA-governed policies may be less expensive, but they tend to provide less coverage and be far more challenging to appeal if you receive a denial of benefits.

Obtaining long-term disability coverage can be essential to protecting your future. When you initiate a claim under this coverage, however, you need to be aware of your rights and responsibilities, which may necessitate the assistance of legal counsel. At Bonnici Law Group, we offer you client-centered representation at all stages of the long-term disability benefit claims process. When you need the kind of help that only an experienced long-term disability benefits attorney can offer you, contact Bonnici Law Group at 619-259-5199 or help@bonnicilawgroup.com.

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