Disability Income Insurance – two myths debunked

Most people know at least something about this product – usually called DI – however there are a lot of misconceptions and I am going to try and sort out a couple of the main ones here.

Myth – none of the policies ever pay and if they do pay, you have to be nearly dead!
While it is true that there tends to be some litigation or mediation involved for many claims, most situations where payment is contested by an insurance company involve either a lack of full disclosure of pre-existing conditions or issues arising from the claim itself concerning the true extent of disability. When answering the medical, personal habits and activities question, make sure you disclose everything, regardless of how trivial it might seem. Ensure your advisor is accurately recording your responses because you are responsible for what is on the application even though someone else wrote the information. All insurance contracts are defined as contracts of the “utmost good faith” and the insurance companies have a legal right – and responsibility – to hold to that definition. Trying to hide or not disclosue information such as recreational drug use or even something such as mountain biking, can result in the claim being denied.

As for the second part of this Myth, it is unfortunate that news reports only focus on cases where benefits are being denied, not the hundreds of millions of dollars that are being paid. Cases that involve obvious physical or medical injuries or damage are very rarely questioned – it is the potentially ambiguous cases that get challenged. Many such cases involve soft-tissue injuries which don’t appear on traditional X-rays, MRIs or CT-scans – it is the client’s word and most medical practitioners will err, as they should, on the side of caution and support claims for disability when requested. Believe it or not, the insurance company does want to pay the claim – but only the legitimate claim. Soft-tissue cases are very hard to evaluate but there is new technology that is now being used – IR scans – Infra-Red scans of the human body. Quite interesting to see actually – the scan measures heat being radiated and displays this on screen or printed hardcopy in living colour! Our bodies are miraculous compensators and the body does its best to heal itself. It does this by sending more blood to injured parts of the body – and concentrations of blood are WARMER than the surrounding tissue. Guess what, the higher temperature areas appear in RED on the IR scan and it is very easy to see if there is indeed an injury to soft tissue, because the affected area now appears bright red!

Guess what – no concentrated area of heat, no soft-tissue injury and therefore no valid claim!

If a claim is denied, there is always a sound reason for that decision – insurance companies don’t take those decisions lightly; they know it will end up in the media somewhere. When you do see such stories, don’t judge by the headlines; read the facts. Headlines are written to get your attention and mine – they do not tell the entire story.

Ian Whiting

Ian R. Whiting CD, CFP, CLU, CH.F.C., FLMI (FS), ACS, AIAA, AALU With more than 40-years of experience in the industry, Ian has qualified 3 times for MDRT, completed LUATC in 1979, the LUAC Financial Planning Skills Course and attended numerous Schools in Agency Management and Sales Management through LIMRA. He obtained his CLU in 1987 while also completed his IFIC qualification and completed his Fellowship in the Life Management Institute with a specialty in Financial Services in 1988. In 1989, he completed qualifications for his Chartered Financial Consultant designation. In 1992, he qualified as an Associate of the Academy of Life Underwriters (Head Office underwriter qualification) and in 1993 he completed his Associate, Customer Service designation program through LOMA. In 1997, he qualified as a CFP and also completed his courses and exams to obtain the Associate, Insurance Agency Administration designation. In 1999, he completed the study and examinations to qualify as a Trading Officer, Partner and Director for Mutual Funds with the BC Securities Commission. As a result, he is also qualified as both a Branch Compliance Manager and Head Office/Provincial Compliance Officer. He served for nearly 18 years with the Canadian Forces (Air) Reserve (reaching the rank of Captain) primarily working with Air Cadets and was award the Canadian Forces Decoration (CD) in 1982. Long known as a maverick and forward thinker in the financial services world, Ian enjoys the challenge of learning new material and planning for the future evolution of his chosen profession.