Income protection insurance (“IPI”) is a policy that you can buy which will protect you in case you become unable to work. Typically, they cover people who are unable to work due to disability (because of illness or accident).

These “IPI” plans, when they are named as such, are commonly available in places like the United Kingdom and Australia. In the United States, they more commonly go under the title “disability insurance.”

What Benefits Does this Type of Policy Provide?

Benefits will not kick in until the deferred period, or policy-stated amount of time between the beginning of the disability and the beginning of payment of benefits, has passed.

When benefits do commence, they will be in the amount stated in the insurance policy, which is usually some percentage of the insured’s normal income. It may also be a set dollar amount, instead. Some policies allow for payment of insurance premiums and other expenses such as mortgages.

The policy also governs the length of the period the benefits will last, and it is typical that the longer the benefits period, the higher the premiums will be for that policy.

When purchasing a policy, you should carefully review all of the terms and be certain that you understand them, and what you will be entitled to in the event you need to use your insurance. A copy of your policy should be available to you, and you may consider contacting a lawyer if you need help understanding it.

What if the Insurance Company Refuses to Pay Benefits?

In order to get the benefits of the policy, you must meet its terms. First of all, you must meet the policy’s definition of “disabled,” and benefits will be denied if you do not. An investigation will be performed by the insurance company, and you will need to comply in order to avoid denial of benefits. Benefits will also cease payments upon your return to work.

If you receive a denial of benefits and believe it is in error, you have appeal rights. You will need evidence supporting your disability claim during your appeal, including, possibly, medical records, among other types of information.

The appeal process varies, depending on whether the policy was self-funded or employer-funded. If the policy was self-funded, the case is governed by your state’s contract and insurance laws. But, if the policy was employer-funded, it may be covered by the Employee Retirement Insurance Security Act (ERISA).

ERISA Appeals

If your policy is governed by ERISA and you are denied benefits, you must first file an appeal with the insurance company itself. During this appeal, you may present evidence supporting your claim.

Should the insurance company deny your appeal, you have further recourse to file an appeal of their decision in court. However, under an ERISA claim, you will be prevented from presenting any further new evidence in court. The court will be required to decide based upon the record from your appeal within the insurance company. You also may not demand a jury trial.

Non-ERISA Appeals

Claims that are not governed by ERISA will have a different appeals procedure. Appeal with the insurance company may not be required before appealing in court, and you may be able to demand a jury trial.

What if the Insurance Company Drops a Client from Coverage?

An insurance company may drop an insured due to non-payment of premiums or fraud. Generally, the insurance company must provide you with notice of the termination. In some cases, the termination may be appealable. A lawyer can help you make this determination.

Can a Lawyer Help with an Income Protection Insurance Claim?

The complicated language of insurance policies is designed to be tricky for someone who is not an expert at reading legal language. An employment attorney can help you understand your insurance policy benefits. An attorney will be particularly helpful if you experience a denial of benefits.