Dave proposed that I bear in mind buying a type of disability insurance referred to as "own occupation disability gross sales replacement insurance." He explained that, with this type of insurance, if ever I was to suffer a disability that would preclude me from making a living doing what I was doing (e.g., first chair patent trial lawyer), then the insurance would kick in to supply for my own family. I would not be required to take a scale back-paying job or change my occupation: if I could not proceed doing my own very express occupation resulting from my disability, then the insurance would pay out. And on the grounds that I was paying for the insurance out of my own pocket with after-tax dollars, any insurance proceeds would be tax-free. (This article from Motley Fool discusses private disability insurance in more element.)
I thought about it for many years, and did some research. I learned that the odds of getting a disability were more suitable than an accidental death, and yet I hadn't hesitated to purchase life insurance. I decided to sign in for the own occupation disability gross sales replacement insurance. Over time, throughout the time of our annual insurance comments, Dave presented opportunities to purchase additional coverage. Sometimes I introduced coverage, and sometimes I declined. I understood that the most mighty form of insurance was the type I never needed. But we buy it for a reason: to supply an economic aid in time of need.
(In November 2011, I purchased lengthy-term disability insurance for Jennifer and myself, which would pay $200/day in the tournament that either or both of us could not functionality two or more of the 5 defined activities of day-to-day living. A week after I signed those applications, I saw blood in my urine, which began me down the rabbit gap of bladder cancer. But this post is not about lengthy-term disability insurance – it's about my experience with own occupation disability gross sales replacement insurance.)
After I was diagnosed, I kept on working. I kept working along through my neoadjuvant chemotherapy. I planned to maintain working after I recovered from my radical cystectomy, when my bladder and prostate was removed, and neobladder was built. I all began to reconsider that plan when my cancer was discovered to have spread into my lymphatic formula. Nevertheless, I tried to come back to work after my surgical procedure, even leading a three-week lengthy patent trial in late 2012. But my neobladder continued to leak at evening no matter what I did. With every leak, I would bolt upright in bed (something regarding the proximity of a nerve to my rearranged urethra), and I would be unable to go back to sleep. After months of battling sleep deprivation, along with battling metastatic cancer, I discovered that I was unable to proceed in my career with an identical level of excellence and willpower as before.
Under my law agency's partnership agreement, a partner who becomes disabled will be paid for not less than the remainder of the calendar year at an identical volume as if he had been working for the year. It was a form of short term gross sales replacement insurance. So for 2012, I didn't suffer any loss in compensation, even though I worked less than 0.5 of the year.
Near the end of 2012, I submitted disability applications to the two insurance companies (Unum and MetLife) that underwrote the four own occupation disability gross sales replacement insurance policies that I had purchased. I documented my cancer ride to date, mailed more than a foot-thick stack of scientific information, provided copies of gains information and tax returns, and gathered letters from my doctors and my work. I had lengthy phone conferences with claims examiners. Dave (the insurance agent) and my law agency supported my application. The process was not acrimonious in any method – all of the insurance company employees were unfailingly courteous, skilled, and sympathetic. Eventually, both firms agreed that I met the policy necessities for own occupation disability coverage. Even though I can have been competent to work not less than part time doing something other than first chair trial work, that was not relevant as to whether the policies would pay out. The insurance companies all began to pay out as required by insurance contracts. One of my policies even required the insurance company to make contributions to a retirement plan, since I would no longer be doing that.
The policies all only if, as lengthy as my ongoing gains are less 20% of my pre-disability gains, then I am categorized as "totally disabled," and should be paid 100% of my monthly advantage. Any dollar that I am paid over that 20% limit would result in a dollar-for-dollar reduction of insurance advantage. Because my insurance benefits are not taxed, and the method the offsets work, it turns out that there's no economic incentive to work (and earn) anything less than sixty 5% of my pre-disability gains. In other words, assuming I was competent, if I was to go back to working 0.5-time (and being paid 0.5 of my pre-disability gross sales), I would actually be netting less than if I was being working (and being paid) 20% of my pre-disability gross sales.
My law agency and I agreed that, beginning in 2013, I would proceed as an equity partner, but would be paid a flat volume equal to about 15% of my pre-disability gross sales. I have a huge volume of deductions from that flat payment, including a range of skilled payments, life insurance, and health insurance. (As as a partner, or co-owner, there's no employer contribution for health insurance. I pay 100% of the cost for own family health insurance overage, which runs in extra of $20,000 per year).
Between the private disability insurance payments and the ongoing gross sales from my agency, all of my own family's financial desires are being met. I have been profoundly grateful that I acted on my insurance agent's tips to purchase own occupation disability gross sales replacement insurance. I have been relieved of the desire to proceed to work to supply for my own family, giving me extra time to take delight in my remaining days on earth.
There have been some hiccups and kinks in the process of continuing to receive payments under my own occupation disability gross sales replacement insurance policies, however. MetLife insists that it is unable to make electronic deposits, but need to mail a live check each and every month. Unum initially agreed to "conditionally" make payments under my policy, booking the right to modify its mind. After I and my agent pressed Unum for why it was booking its rights, it agreed to withdraw the conditional designation. Early on, the MetLife claims administrator was interested in whether I was collaborating in vocational rehabilitation. It took a bunch of conversations with the claims administrator, and the intervention of my insurance agent with some of the MetLife higher-ups, for MetLife to figure out that whether or not I was collaborating in vocational rehabilitation was completely beside the point as to whether it's going to be paying out under my policies. And it took MetLife more than six months to begin investing my "new" retirement savings into the mutual unearths that I had selected, thereby missing a meaningful volume of gains.
The events that triggered this blog post began last fall, when Unum sent me a letter claiming that I had been overpaid by about $14,500 in 2013. In a later phone conversation and letter, the Unum claims administrator told me that she and one of their in-house actuaries had reviewed my 2013 K1 from my law agency and had determined that in 2013 I had been paid about $2000 over the 20% threshold of pre-disability gains. I was sent the calculations, which I reviewed, but which made no experience to me. Unum said it would start withholding 25% of its monthly payments until the $14,500 was recouped. After some digging, I determined that interestingly what put me over the 20% threshold was the fact that my 2013 K1 erroneously included in my overall compensation the cost for a reserved parking place at my downtown office (about $2500 – parking is pricey in DC), even though I had given that up in 2012. Despite explaining and presenting additional documentation to Unum regarding the cost of parking in DC, I was unable to persuade the Unum claims administrator to modify her mind. (To this day, even if Unum was right, I don't realize how my getting paid $2000 over the 20% threshold intended that I was overpaid $14,500 in a year.) Frustrated, I forwarded the letters and calculations to my insurance agent, Dave, who agreed to press my case. To his super credit, he continued to persist, ultimately raising this situation with Unum's senior management.
Today I obtained a letter from Unum. It noted that Unum had reversed the option to recoup $14,500 from my 2013 payments. In addition, the letter noted that, in reviewing my claims payments, Unum had determined that it improperly delayed making payments under my policy, and that I should be paid a further $25,000, plus $500 in accrued curiosity. I checked, and discovered that yesterday Unum made a $40,000 direct deposit to my bank account. Go figure!
I told Jennifer about this, and she said, "Woo-hoo! Where do you would like to go on holiday?" (Instead, I've used the money to pay down our HELOC.) Each of the kids laughed and thought it was a truly fantastic turnaround. This story reinforces what my agency's insurance practice group tells clients: the denial letter from the insurance company is never the end of the matter, but is just the beginning. The moral: when an insurance company says no, don't give up. Keep pressing. Get an man or woman to aid make your case. You never know how things might turn out.