Clients now seem to spend more time fighting to get them.

Perhaps you saw the 60 Minutes coverage on UNUM in the fall of 2002? It highlighted the problems some UNUM policyholders were having collecting benefits in disability circumstances that seemed at least on the surface like slam-dunks. One case highlighted was that of John Tedesco, an eye surgeon who injured his back lifting a golf cart, and who also had Parkinson's disease. UNUM denied his original benefit claim. 60 Minutes implied that UNUM had all of the information it needed; UNUM's position is that once it later received a definitive diagnosis of Parkinson's, it paid the claim immediately.

This show, which some wags have dubbed 60 Depressing Minutes, left the viewer with the impression that UNUM in particular and the disability insurance industry, as a whole, is playing games-and that they're doing everything in their collective power to deny claims, legitimate or not.

Is it true? That will be your call after reading what follows. The point is that maybe you should start pitching this risk management solution a little differently to your clients. They may be someday fighting for benefits they feel entitled to by virtue of years of premium payments-benefits the carrier doesn't agree should be so readily forthcoming.

Talking to industry participants about this story reveals Mars-vs.-Venus-style differences of view. Disability agents cite largely benign encounters with insurers. Yet many financial advisors know at least one client who's experienced an allegedly unfair claim denial. UNUM says it uses an irreproachable claims evaluation process, yet independent consultants have serious doubts.

John Ryan, a familiar face at many planning industry conferences, operates Ryan Insurance Strategies in Englewood, Colo., and maintains he's had no trouble with the claims he's helped clients process, nor has he seen problems with his insurance associates' claims. "Insurance companies must look initially at denying claims because many aren't legitimate, either because policyholders are trying to take advantage of the system, or they simply don't understand the language in their contracts," says Ryan.

Kim Natovitz, owner of Long Term Care Planning Services Inc. in Bethesda, Md., shares Ryan's perception: "I personally have had positive claim experiences with UNUM. However, the cases have been cut and dry and the claimants have not been self-employed, which makes a big difference."

Unlike agents, financial advisors are skeptical. Many have horror stories to relate, like Fred Meyer of Meyer Financial Planning in Punta Gorda, Fla. Meyer tells a rather convincing tale of a 43-year-old dentist: "He [now] has an obvious and severe disfigurement of his right hand. He can't perform the material duties of his own occupation, for which he is insured. The disfigurement doesn't prevent him from playing golf, and he's quite good at it. After being followed, observed and videotaped, his claim was denied. His disability insurer has interviewed friends and former employees, and they all support this dentist's claim. Employees have seen him writhe in agony and cry real tears. He'll drop crowns on the floor because he can't grasp them properly. These disability companies don't care who they screw. They just want to get even for the times they have been cheated in the past and they don't care how they do it."

Meyer, now a fee-only financial advisor, was once an agent who sold disability insurance "in good faith for a lot of years." Now, he scoffs at the sales materials the big companies produce, as he says, "to make the consumer feel like they would really protect you. Baloney."

Diane Pearson at Legend Financial Advisors Inc. in Pittsburgh, has a client who she says will probably file a lawsuit against UNUM. Three years ago, the stress of this radiologist's work caused almost life-threatening high blood pressure and a deterioration in his health. He started to get benefits from UNUM that lasted through the summer of 2002, when they were discontinued.

"My client went back to UNUM, [and] requested a copy of their findings from the interviews they had conducted with his psychologist and primary care physician, to see how they substantiated the discontinuance of his benefits," says Pearson. This led to a finding by the client that the psychologist had been misquoted, to UNUM's advantage. That's where the case stands for now. A simple mistake on the part of UNUM's claim examiner? Maybe. But the client wonders if the facts his policy gives him lifetime benefits and he hasn't shown a continuing deterioration in health beyond his initial disability has had a bearing on UNUM's position.

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