My Disability Insurance Claim
August 13th, 2021 will be three years since I crashed on my bike and shattered my femur. I want to share a little bit about my experience when I filed my disability insurance claim and what has happened since that time.
8/13/2018 was a Monday. We usually do a long ride on Sundays with a group of guys. That Monday after work I told my wife I was going for a short ride just to spin out my legs. Sometimes after you have ridden a long way, the next day your legs just feel a little dead and a short spin can make them feel better, so that’s what I did.
I go through a neighborhood in order to get out on a big street called Tramway where we ride all the time. There was a tree chipper truck in front of me and his partner in a pickup truck was waiting at a stop sign as I went past him. I went over a little speed hump and started to turn left. The weird thing was, as I turned left and leaned the bike over a little, it kept going straight. I remember looking down at the front tire and seeing the rim of the wheel sliding on the ground and suddenly the wheel washed out and I was on the ground. All of this happened in less than a second.
The guy in the pickup truck stopped and said, let me help you up. I told him, don’t move me! After that, he just left, and I was lying in the street. It was 5:30 in the evening and the pavement was hotter than hell but I couldn’t move. Some kid was riding by on his skateboard and asked if he wanted me to call 911. Seemed like a reasonable thing to do. Immediately after that an off-duty sheriff pulled up, put on his lights, called whoever sheriffs call and things started to happen.
My birthday is on August 4th and I remember the ambulance attendant telling me this was a shitty way to spend my birthday. Understatement of the century! I called my wife when I was lying in the street and she asked if I had a flat and needed to get picked up. Well…. Not exactly!
Hospital, Surgery, Rehab, etc.
The ambulance dropped me off at the emergency room and then it was what you would expect. Stay the night, surgery the next morning, then 7 days in the regular hospital and 9 more days in a rehab hospital. After I finally got home, I started going to physical therapy 3 times per week and that stopped after 8 months. I had to use a walker for a few months and then had to walk with a crutch until the end of the year.
I remember the first time they took me from the rehab hospital over to see my surgeon at his office. The receptionist asked to see my insurance card. I had a hospital gown and a pair of shorts on. I definitely didn’t have my insurance card.
I rode again outside for the first time on 3/8/2019. The first thing my buddy, Ben Welch and I did was go finish my left turn.
I bought my first individual disability insurance policy in 2006. I had group disability insurance, but I was told it was good to get an individual policy as well. In addition, I bought a disability overhead expense policy that could pay my business expenses if I ever became disabled. When I left Northwestern Mutual in 2013, I lost my group coverage so I added one more individual policy and another policy through one of my professional associations. I had a total of $17,000 per month of individual disability insurance and a little over $5000 per month of overhead expense.
After I finished with my physical therapy in April of 2019, I still didn’t decide to file a claim for my disability insurance until later in the year. My individual disability insurance policies had 90 day waiting periods and my small overhead expense policy had a 31 day waiting period. The waiting period is the time you have to wait after you had a disability before you will get paid on your claim. I figured I would file the claim on the overhead expense policy and maybe I would get a month or two of benefit.
When I filed the overhead disability claim with Northwestern Mutual, the claims adjuster said they were also going to file a claim on my individual policy as well. I told him, it wasn’t going to work because I got hurt in August, but I started working again towards the end of that year and besides that, I never had a drop in my income. He told me, you’ve been going to physical therapy, right? I said, yes, I go three times per week and I had done that for 8 months. He also reminded me I couldn’t walk for a while, nor drive thus I had a loss of time and duties. Okay, whatever.
In February of 2020, right before the pandemic started, I went to the Ed Slott IRA workshop in San Francisco. My wife sent me a text and said, you got a check in the mail from Northwestern Mutual. How much, I asked? It was over $20,000. I thought there must have been some mistake. When I got home, I looked at the explanation of the claim and it was almost the total opposite of what I expected. On my overhead expense policy with the 31 day waiting period, I only got paid for one month of disability. That policy had a definition of disability that said you had to be totally disabled in order to receive a benefit. In October of 2018, I went on one appointment to review a 401k plan for one of my clients. My wife drove me to the appointment, I was wearing one shoe and one of those hospital socks on my left foot. I was using a walker and my wife had to bring one of those folding chairs so I could prop up my injured left leg. After I was finished, one of my sons drove to the office to pick me up. Then I went home and took a nap. That one appointment showed I wasn’t totally disabled, so I only got paid for one month after my waiting period.
After I saw the way the insurance company was looking at my claim, I filed a claim on my other two disability policies and received benefits from them as well.
What I Learned
First off, I never, ever thought I would get disabled. I know other people get disabled and it seemed like a smart thing to do, but I never thought I would use the insurance. I figured I would keep it until I turned 65, then stop the coverage and be happy I didn’t spend that much money on it.
More money is better than less money. When I last added to my disability insurance policies, I bought as much coverage as the insurance companies would let me get. Now I’m the only breadwinner in our household and everybody’s situation is different, but I feel insuring your ability to earn an income for the full amount makes sense. I always use this example. If you had a money machine out in the backyard spitting out hundreds of thousands of dollars every year, would you insure it?
You don’t give a damn about the premium when you are filing a claim. I pay a little over $680.00 per month for my disability insurance but I never gave one ounce of thought to how much I pay when I was filing the claim. I was just happy the companies that I chose paid my claims.
Income tax free money is better than income taxed money. I don’t write off the premiums on my disability insurance. This meant that the money I received on my claim came to me, tax free.
Companies and definitions of disability are super important. Life insurance is pretty simple when it comes to paying a claim. If you’re dead, the company will generally pay the claim. There are exceptions of course, but you get the point. With disability insurance, a lot of the decision whether or not to pay the claim depends on the definitions in the policy. Some policies will only pay if you are totally disabled. Some policies have limits on paying claims because of mental or nervous disorders. On my policies, I have a partial or residual disability rider. That meant I received a benefit even though I wasn’t totally disabled nor did I have a loss of income because of my accident.
When you are looking at purchasing disability insurance, it makes sense to work with an agent or broker who knows about various companies and their policies. My policies were with three different companies, Northwestern Mutual, The Standard and the association policy is underwritten by Guardian. You definitely don’t want to be fighting with an insurance company when you are disabled. If you need any help with this, I know a guy!!
Finally, you have to buy insurance before you need it. It’s always better to buy insurance when you are young and healthy. It’s cheaper if nothing else. Plus, most people are healthier when they are younger and are more likely to get a better rate class.
For most people, their ability to earn an income is their biggest asset. People insure their cars, their houses, even their cell phones for full replacement value yet don’t put the proper amount of insurance on their most important asset. This doesn’t make any sense. One of my insurance brokers who helped me get one of my policies told me about a financial planner who said he doesn’t believe in disability insurance. He thinks it is a rip off. If somebody tells you that, run!!
1 in 8 people will become disabled prior to the age of 65. 50% of home foreclosures are caused by disability. I read a post on LinkedIn that talked about various ways people become homeless. A lot of times it happens when people get hurt or sick and don’t have an income. They lose their job, lose their insurance, and eventually lose their house. There is a way to prevent this from happening. Buy disability insurance that will protect your most valuable asset, your ability to earn an income. If you need any help with this, click the Get In Touch button at the top of my website. As always, thanks for reading. KB