Why Do Insurance Companies Deny Long-Term Disability Claims?

Has your long-term disability claim been denied? Find out why this may have happened, and what you can do about it.

00:33 27 December 2022

When you are unable to work for an extended period of time, long-term disability insurance can be just what you need to ease your financial burden and maintain your standard of living. And yet, even if you pay your monthly premiums in full and on time, there are many instances in which long-term disability claims are denied. Why is this?

Well, unfortunately, there are many reasons. But the most prominent is likely that insurance companies don't actually want to pay out unless they absolutely have to. We'll talk about why these claims get denied, and what you can do about it, right here.

Insurance Companies Don't Want to Pay

Insurance companies would prefer if you had to pay them your premiums, but you never actually qualified for their insurance coverage. You pay them, and they don't pay you. Remember, insurance is a business, and that's how they make money. Worse yet, your insurance claims are often evaluated by employees who work for the insurance company.

Simply put, it's a conflict of interests. At the end of the day, insurance companies don't want to approve you for an insurance payout if they don't absolutely have to. Legally, they do have to if you qualify, but there are many ways for them to initially deny a long-term disability claim.

Lack of Sufficient Medical Evidence

This is the most common reason companies will provide for denying your claim. They will claim that there is no enough medical evidence to prove that your disability qualifies for insurance coverage. Now, this is a real issue. You need to make sure you include all medical documentation when submitting your insurance claim.

Medical records, test results, and physician statements about your disability and its effects all need to be submitted along with your claim. You'll also need documentation proving that your disability requires ongoing medical treatment. If you do submit all of this documentation, there may be another reason your claim is initially denied.

You Do Not Meet the Disabled Criteria Outlined in Company Policy

Different insurance companies have different definitions of "disabled" and what qualifies for long-term disability. Some companies may only qualify you if your disability specifically prevents you from performing your occupation. Others may not allow pre-existing conditions from before you signed up to qualify.

Some companies also make it very difficult to qualify if you have a mental disability, as it can be difficult to objectively prove these even though they can have very real effects.

Insurance Companies May Investigate You

Sometimes, an insurance company will actually use an investigator to observe you and see if you really do have the disability that you claim to have. They may take photo or video evidence, and if they see you doing something that seemingly does not line up with the disability that you have, they may use that to deny approval.

This means that you should comply with any restrictions a doctor provides to you, even if you have some days where your disability may not affect you as strongly as others. For instance, if a doctor said you needed to use crutches, you'd want to, even if you had a day where you felt they weren't absolutely necessary to get around.

After all, investigators are rarely getting the full picture, and it's possible that they could misconstrue your situation based on one instance, then use that instance as evidence to deny your claim. 

Needless to say, it is possible for insurance companies to wrongly deny your insurance claim, regardless of how they reason it. That said, if you feel that your long-term disability insurance claim has been wrongfully denied, remember that you have rights, and you can take legal action to get the claim you deserve approved.