Last week the New York Times ran a story
about disability insurance. One of the themes of the story is that disability insurance is often overlooked as part of a person's financial planning. That is certainly a valid and important point. The article also has a sidebar
that provides some detail about what to look for when shopping for disability insurance.
One of the odd things about the article and its sidebar is the complete omission of any reference to or discussion of the role ERISA plays in hunting for disability insurance. I've handled dozens of disability claims for individuals who have problems getting their insurer to pay benefits. Whether your policy is governed by ERISA is a very important consideration in what type of disability insurance you should spend your money on. This is not a close call. Purchasing an individual disablity insurance policy outside the scope of your employment is the way to go. The ability to obtain better remedies and claims procedure protections outside ERISA far outweigh any marginal increased cost that may exist for such an individual policy.
All other factors being equal, disability insurance provided through your employment (unless your employer is a governmental agency or a church plan) is inferior to an individual disability insurance policy.
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