Disability Limitation of Benefits

A Disability Limitation of Benefits is a provision in an insurance policy that limits the length of time or amount of benefits paid for a disability claim. This provision is included to manage the financial risks for the insurer and prevent potential abuse by the insured.  

Here are some key features of a Disability Limitation of Benefits provision:

• Limits the duration of benefit payments: The policy will specify a maximum amount of time that the insured can receive benefits for a disability claim, often ranging from 2 to 10 years.

• Limits the amount of benefits paid: The policy will also specify a maximum amount of benefits that can be paid out for a disability claim, often expressed as a multiple of the insured's income.

• Triggers for limitation: The policy will typically specify certain conditions that will trigger the limitation of benefits, such as mental or nervous disorders, or substance abuse.

• Exceptions to limitation: The policy may include exceptions to the limitation of benefits, such as disabilities resulting from accidental injury or certain illnesses.

Example: John has a long-term disability insurance policy that includes a Limitation of Benefits provision. The policy specifies that John can receive benefits for a maximum of 5 years or until age 65, whichever is shorter. Additionally, the policy limits the total amount of benefits John can receive to $1 million. The policy also includes a list of exclusions, such as disabilities resulting from war or self-inflicted injuries.