Disability Insurance While Employed

If an insured becomes totally disabled, he may recover payments under his disability insurance policy during his period of disability. One factor that is used to determine the insured’s eligibility for such payments is his ability to work. If he has the ability to engage in substantially gainful employment, for example, he may be denied coverage. Also, if he actually obtains employment, he may also be denied coverage. This articles addresses situations in which the insured may or may not be entitled to disability payments if he actually obtains employment.

An insured’s efforts to work after becoming totally disabled will not automatically make him ineligible for disability payments. If his disability is in fact total, his conduct may not be the test to determine if the insurer is liable. In addition, the insured’s ability to receive income is not the same as earning capacity in an occupation with respect to determining if he is entitled to disability benefits. Factors such as the type of work and the timing of the work may be considered in determining the insured’s eligibility.

Entitlement to benefits

The insured may be entitled to disability benefits even if:

    • he returns to work while his ailments grow progressively worse

    • his employer keeps his name on the payroll or keeps up his salary payments

    • he performs light or inconsequential work

    • he increases his income following the injury

    • he obtains some type of financial gain, whether in his regular occupation or in another type of work

    • he continues to work because of a lack of awareness that his injury necessitates immediate attention

    • he attempts to return to work despite a policy requirement of continuous disability

    No entitlement to benefits

    On the other hand, an insured may be denied disability benefits in the following situations:

      • he does not stop working because of his claimed disability

      • he returns to his old employment and receives the same wages

      • he works a substantial part of each day, even if less than before his injury

      • he works for a long period of time after his injury

      • he tests out various employments despite the policy’s provision that he may not perform work for any compensation

      • the circumstances of his employment show that he is not totally disabled

      Copyright 2012 LexisNexis, a division of Reed Elsevier Inc.

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