Why does the industry have such a cap limiting mental/nervous claims to 24 months, when all other benefits can be paid up to age 65 and beyond?
Let's be more precise: First, that statement is true for all group plans and for most non-cancelable policies, with few exceptions; those carriers might pay for the full benefit period in most states and for most occupations. Other carriers that do not limit their benefit period might pay for 60 months, but again, only for certain occupation classifications.
In any event, take the case of a top insurance producer who has a nervous breakdown as a result of the pressure from trying to get all of his applications issued. It seems the more applications he submits, the more frustrated he becomes, and one day, he throws up his hands and screams, "I've had it, I'm outta here!" and storms out of his office, running down the street stark naked.
The police have him committed for an evaluation, and the psychiatrist says he's had a severe nervous breakdown and won't be able to work in a sales environment ever again.
Fortunately, he has a disability policy that pays handsomely on a tax-free basis, and along with a pure own-occupation definition for total disability, he appears to be home free.
Of course, while under claim, he has to see his therapist for evaluation. The therapist gives him a prescription to settle his nerves, which satisfies the claims department's requirement that he is unable to perform the material and substantial duties of his occupation. As a result, he is paid on a regular basis. But after 22 months, he receives a letter informing him that in two more months, his benefits will cease (unless he is confined to a hospital), since these types of benefits have an aggregate cap of 24 months. Obviously, the recurrent disability clause is of no benefit, assuming he recovered and then had a relapse.
So why do many non-cancelable carriers, and all group carriers, limit the mental/nervous disability to 24 months?
For one, these type of claims are subjective in nature, as compared with a broken arm, which becomes objective with an X-ray. The carrier does not want this to become a duel between doctors (both theirs and the client's), in which one says he has the condition and the other says he does not.
What about the carriers that have no such cap? Since the cap is a fairly recent situation, the jury is still out, and to be paid for the full benefit period will be no easy event, since there will be more scrutiny and more requests for attending physician statements and independent medical evaluations.
If your client is eligible, should he or she only apply to a carrier that has no such cap? And if they have a pre-existing mental/nervous condition, should the carrier still issue with an exclusion and a possible shorter benefit period?
