At BenGlassLaw, our long-term disability lawyers see all kinds of disability insurance policies from some major companies. Recently, we encountered a policy from an employee at AT&T. It was a "self-written" disability insurance policy that was truly atrocious.
So, what makes the policy so bad? There are a few things.
Most policies retain an “own occupation” period of protection, followed by an “any occupation” period. During the “own occupating” period, you have to be unable to do “your own job” to get benefits. During the “any occupation” period, generally after 24 months, you have to be unable to do “any job in the national economy” to get benefits. The “any occupation” standard is much tougher because there are many sedentary jobs in the U.S. Here is the definition of disability for LTD benefits from AT&T:
“You are considered Totally Disabled…. when you have an Illness or Injury that prevents you from engaging in any employment for which you are qualified or may reasonably become qualified based on education, training or experience and you are incapable of performing the requirements of a job other than one for which the rate of pay is less than 50% of your pay at the time your LTD started.”
What this means is simple. To get benefits from AT&T, you have to be unable to do any employment in the national economy which would earn you more than 50% of your prior income. There is no “own occupation” protection. Your inability to do your old job is largely irrelevant. We rarely encounter a policy that doesn’t provide even some protection for an inability to do one’s “own occupation.” A good policy protects you from an inability to do your “own occupation” for life.
But wait, there's more! The definition of disability for STD benefits is similarly bad. You are protected during the STD period if “you are unable to perform all of the essential duties of your job or another available job.” Your inability to do a single job function won’t get you even STD benefits. You must be unable to do every single job function of your job, and any other position offered to you. Keep in mind; the insurer is the employer here. They can essentially accommodate you out of benefits.
Another first-time policy provision in this policy is one governing “travel during the STD period.” Under this policy, your STD benefits are terminated if you travel outside a 60-mile radius, or overnight, without the prior permission from your employer/insurer. That’s right; you are a prisoner while receiving benefits. The policy reads:
“Travel away from home (outside a 60-mile radius or overnight) during a Short-Term Disability Benefits absence (from work) is not permitted without prior permission of the claims administrator.”
Normally, traveling is a bad idea, because it can be used to say you’re not disabled. However, we have never seen it listed as a specific reason for termination of benefits, and we read hundreds of these policies yearly!
Here is why this angers us. You work for this company faithfully. They justify paying you a lower salary based on the perceived benefits they provide you with. You don’t know what a crap policy this is. On the private market, this policy would go for mere dollars a month. This policy is literally worthless. Your employer is ripping you off, and they know it (I mean, after all, they wrote the darn thing!). Under this policy, it is unlikely anyone will receive and stay on benefits. In short, they have sold their own faithful employees an imaginary benefit.