Published on:

Many life insurance policies include a conversion clause. A conversion clause provides a policy owner with the contractual right to update or to convert a policy.  The primary benefit of a conversion clause is that the person whose life is insured does not have to undergo medical underwriting for an updated policy to issue.  In Tennessee life insurance policy cases, a policy owner’s rights under a conversion clause may be important to understand.

Underwriting classes are determined based on the medical history, physical condition, habits, and smoking status of the life of the person insured by the policy. Sometimes though, an insurance company will change the names of its underwriting classes so that there is no underwriting class by the same name or description as the underwriting class which applied to the first policy. If that occurs, what type of underwriting class, and thus, premium rate, should apply when the policy is converted?  The classification of the life of an insured can mean thousands, or tens of thousands, of premium dollars.

A couple of federal cases provide some guidance.

Published on:

The definition of “total disability” is among the most important definitions in a disability policy and, consequently, in disability lawsuits.  It is also one of the most confusing.  For example, can you recover disability benefits for total disability if you can still perform some aspects of your job?

In a recently published Sixth Circuit case, Leonor v. Provident Life & Acc. Co., (2015), the court wrestled with an insurance company’s interpretation of its definition of “total disability,” and construed it in favor of the insured.  The Plaintiff, the insured, a practicing dentist who also managed several dental offices, suffered a spinal injury that prevented him from performing dental procedures.  He was still able, however, to manage his dental offices.  In fact, after his injury, he bought more dental offices.  Those investments proved lucrative and the Plaintiff’s overall income actually increased after his injury.

Following his injury, Plaintiff claimed total disability benefits under each of his three disability policies.  Initially, the Defendants, the insurance companies, began paying his disability benefits.  Later, the Defendants stopped paying disability benefits under two of the policies when they discovered that the Plaintiff was able to manage his dental offices.  In denying the Plaintiff’s disability claim, the Defendants pointed to the definition of total disability in his policies:

“’Total disability’ means that because of Injury or Sickness:

You are unable to perform the important duties of Your Occupation….”

(emphasis added)

Defendants maintained that, under the policies, the Plaintiff would have a “total disability” only if he could not perform all of his occupation’s important duties.  The Defendants pointed out that the Plaintiff could still perform the “owner/operator” duties of his occupation, and, therefore, did not have a total disability.

Continue reading →

Published on:

If you’re making a disability insurance claim, the type of plan you have may matter more than any other fact in your case.  Consider, for example, two plaintiffs who have the same occupation and suffer from the exact same disability, only Plaintiff “A” has an employer-provided plan governed by the Employee Retirement Income Security Act (ERISA), while Plaintiff “B” has an individual long-term disability policy.  Plaintiff A may have a far more difficult time collecting her disability benefits.

The reason is straightforward: In an ERISA case, the standard of review (the amount of deference a court will give to a plan administrator’s denial) is high and the plaintiff must show that the denial of benefits by the plan administrator was “arbitrary and capricious.”  Making matters more difficult for our Plaintiff A, the court will usually examine only the record which was before the plan administrator in determining whether the plan administrator’s decision should be overturned.

In contrast, a claim brought under an individual disability policy for failure to pay benefits is a claim which will be brought pursuant to the Tennessee common law of breach of contract.  Therefore, Plaintiff A can take her case all the way to a jury decision by merely showing that there is a triable issue as to whether she suffers from a disability as defined in her policy.