But “it” — becoming disabled — did happen to more than 800,000 people in 2006, according to Bob T... Disability insurance taugh | Life Insurance
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But “it” — becoming disabled — did happen to more than 800,000 people in 2006, according to Bob T... Disability insurance taugh

But “it” — becoming disabled — did happen to more than 800,000 people in 2006, according to Bob Taylor, executive director of The Council of Disability Insurers in Portland, Maine.

Eric Studley, a dentist turned disability insurance salesman and founder of an eponymous firm in Huntington, N.Y., has a unique strategy: He presents potential clients with the most expensive and rider-rich proposal he can devise. When they ask him why competing proposals cost so much less, he points out what they are not getting from the competition, which usually cements the relationship.

Mr. Studley, who has 3% of the New York disability insurance market for dentists, is no stranger to bad insurance advice and service. While practicing dentistry, he developed bilateral carpal tunnel syndrome and a type of muscular dystrophy, forcing him to give up his practice.

Mr. Studley thought that his policy — which was supposed to pay him $10,000 a month for as long as he remained disabled — would ease his family's financial burdens. But misrepresentations to the insurer by his agents caused payments to be reduced to $2,000 a month, leading to a seven-year lawsuit against the agents, which, he said, cost him $750,000 in legal fees before it was settled for an amount he preferred not to disclose.

Clients who think that they are covered adequately because they have disability insurance through work are mistaken, noted Dan Hill, a work-site practice consultant for MassMutual Financial Group in Springfield, Mass.

The 60% of income paid by many group policies often is inadequate to maintain the client's lifestyle, Mr. Hill said. That's especially true of employees who are used to getting hefty bonuses, he added. Also, many employers' standard operating procedure is to fire employees who go out on disability, and no law stops them from doing that, Mr. Hill noted.

After losing their jobs, disabled employees have even more household expenses, because they have to pay Consolidated Omnibus Budget Reconciliation Act premiums to maintain health coverage. After that coverage expires — in 18 to 36 months — they have to buy individual health insurance. That can run $1,500 or more a month, Mr. Large said.

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