Group long-term disability (LTD) insurance is designed to protect employees of a company in the event that they become disabled as a result of a sickness or an accidental injury. The insurance pays out a monthly benefit if the employee is unable to work in their own occupation.
However, most group LTD policies also contain a “Change of Definition” clause. This clause states that after a period of time (commonly two years), the definition of the term “disability” changes such that you no longer qualify for benefits if you are able to perform “any occupation” for which you are reasonably qualified by way of your training, education and experience.
Take the hypothetical example of Tom the Mechanic. Tom has been a mechanic for 20 years when he begins to develop Rheumatoid Arthritis in both his hands. Tom struggles to perform his job but eventually he is unable to repair cars any further and submits a disability claim to the group disability insurance company. After reviewing the medical evidence, the insurance company accepts Tom’s disability claim and commences paying monthly benefits. However, after two years the insurance company cancels Tom’s benefits citing the Change of Definition Clause. While they agreed that Tom could no longer work as a mechanic, the insurance company felt that Tom could perform the job of a parking lot attendant.
Can the insurance company rely upon the Change of Definition clause to terminate Tom’s benefit?
Firstly, they would have to prove that Tom is reasonably suited to work as a parking lot attendant because of his training, education, and experience. This is not the same test as proving that Tom is capable of being a parking lot attendant. A doctor or engineer could likely also be a parking lot attendant but that doesn’t mean they are reasonably suited for that occupation. As one court states, the alternative occupation must be “reasonably comparable” to the insured’s former occupation in “status and reward”.
In this example, I believe Tom would have a strong legal argument that the job of a parking lot attendant is significantly lower in both status and pay than that of an experienced mechanic.
The insurance company would also have to prove that Tom’s Rheumatoid Arthritis does not prevent him from being able to perform the tasks of a parking lot attendant. If Tom’s condition has progressed such that he is unable to use his hands, he would have a strong legal argument that he cannot perform the exchange of money or tickets and thus could not perform the job.
If your group LTD insurance company has terminated your disability claim citing the Change of Definition clause, you should know that a court of law may strongly disagree with the insurance company’s position.
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