Disability Insurance: What to Do If Your Policy Is Terminated

If your disability insurance policy is terminated, you need to be proactive to resolve the situation immediately. In many cases, your policy can be reinstated very quickly to begin closing your benefits gaps. In other cases, being informed about the reasons for cancellation will help you replace the coverage in the future. Take these steps to repair the problem to the best of your ability.

Ask for Validation

Contact your insurer immediately to ask for an explanation of the termination. You will need to know precisely why the policy was cancelled if you hope to reinstate coverage. All insurance companies are required by law to notify you of reasons why your policy was denied, or cancelled. For this reason, it is important to record the dates you made your requests for validation of the loss of coverage. If the insurer does not respond within 14 business days, act immediately to follow up.

Check your Policy

Once you receive notification of the reasons for your cancellation, compare these reasons with your policy. For example, your insurer may cancel your insurance if you fail to pay a premium. However, if you pay the premium within 7 days of the due date, they are not permitted to cancel your coverage.

Further, your insurance company may be required to follow specific steps in order to cancel your coverage. Typically, a policy ensures you will be notified in writing in advance of the cancellation and be given steps to rectify the problem before you lose coverage. If the insurance policy violated your contract, the cancellation is not valid. 

Take Steps to Rectify the Problem

If you know your policy was unlawfully cancelled, inform the insurer of this problem immediately and ask to have your policy reinstated. Be sure you notify your carrier by phone and in writing. You may also notify your state board of insurance if your policy was cancelled in violation of your insurance contract.

If the reasons for your cancellation were valid, you will need to take different steps to attempt to reinstate coverage. For example, if your policy was cancelled because you did not properly validate the continued persistence of your disability through routine physician's statements, ask your insurer if you can resubmit a claim from your physician confirming you are still unable to return to work. You may find your contract even permits for you to reinstate your policy through this type of method.

Contest a Decision in Court

You may be unable to reinstate your policy directly with the insurer even if you feel you have a right to do so. If this is the case, you can consider suing the insurance company. The cost to sue an insurance company will be expensive, so this exercise is only valuable if you heavily rely on the insurance and if you feel you have a solid legal basis for your claim. In this case, locate an insurance attorney in your area. Provide your attorney with the documentation you saved on your repeated contacts with the insurance company to date.

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