Disability Insurance Observer: Extras

The problem is, the people with the authority to bless the sale of new product sales features did not seem to understand how diligent lawyers helping ailing, highly paid executives might be at proving that their executive clients were totally disabled, especially when the economy was going bad.

The result: Even at a time when a weak job market and low interest rates are making insuring and reinsuring long-term disability insurance profitable, the results of a hazy understanding of policy design risk have made soaring Australian TPD claims a story big enough to make news in the United States.

Of course, insurers have to accept underwriting risk and investment risk or accept that they will soon become irrelevant. But this is a case in which it seems as if a few subtle tweaks in policy language could have provided insurers with a great deal of protection, if only insurers had fully understood the risks they were assuming.

See also:

• Disability Insurance Observer: The Fed and savers
• Disability Insurance Observer: Why IDIS matters
• Disability Insurance Observer: Building block approach