Complaint Review: Hartford Insurance Co.

I purchased a long-term disability/income insurance policy heavily marketed to Federal employees, a policy they (the broker) claimed was tailored to our specific needs.  They even bragged about Justice Department experts contributing to the policys construction.   Indeed, some of their policies were sanctioned/endorsed by the Federal Government by virtue of the agreement that certain Civilian managers would have their premiums matched by their respective Government agencies (In other words, the Federal Government subsidized some policies, ostensibly to limit their exposure to liability/costs associated with potential claims).  This is where the clear defraudment lies. The Federal Government, and by extension, the taxpayer,
is defrauded every time benefits are wrongly denied, or as in my case, where the policy itself is an outright fraud. 

 It works like this.  The broker sells a Federal Employee a policy to insure said employees income in increments of $10,000.00 in the event said employee becomes unable to work due to illness.  It all sounds very straightforward.  Ostensibly, if one buys
$10,000.00 worth of income insurance, there must be a reason for allowing an employee to insure such a small amount of income.  Im using the $10,000.00 amount to better illustrate the fraud, not to infer that was all I insured (I actually insured $40,000.00, which was not my full salary for a good reason, at the behest of the broker).  Naturally, if one becomes
disabled, the first port of call is Social Security, which the insurer stipulates as a prerequisite (claiming Social Security Disability Benefits) before making a claim on the policy.  Sounds logical and fair?  So here was my first hurdle. 

 I called the broker (Wright USA) to make a claim underwritten by a large, national insurance firm (conflict of interest) and youll never guess what cheap stunt the broker pulled (remember, one must, according to the policy, first apply for Social
Security Disability benefits before making any claims); she told me that I had no claim because I was no longer employed by the agency!  Now remember, before one can make a claim on the policy, one cannot be working, since in order to apply for Social Security (Full Disability) benefits, one cannot be employed!  I told her that her oxymoronic statement
conflicted with their own policies, at which point they changed tactics; they then told me that since I lived overseas, I could not claim!  I bought the policy while living overseas!  I received all my correspondence overseas, and the policy was marketed to me through my union newsletter, overseas!  So after threatening to litigate their obstruction, they finally provided me with a phone number for the actual insurance company (Hartford) underwriting the policy who quicly reversed the
brokers decision by admitting claims are processed based on the date of injury/disability with a generous grace period, and that neither my employment status nor my address had any bearing on my right to claim on the policy.  After much stalling and shenanigans with my doctors, including requesting his written notes from my visits (a gross breach of privacy) even though he meticulously filled out all their forms, they granted my claim.  Now heres where the silver lining turns to depleted uranium. You will now understand why I used the $10,000.00 example. 

According to the brokers sales pitch, my understanding of the promotional materials and the policy itself, there is no offset provision unless and until the policy holders combined benefits exceed their final salary before becoming disabled.  Thus, the way it was described to me was logical, since implementing the policy as they are currently implementing it,
would have resulted in a monthly payment of $0.00 to me had I actually insured $10,000.00 of income, and heres why.   
If I purchased just $10,000.00 of income insurance, and I applied for and received $1,400.00 of Social Security Disability benefits per month (remember, one must first apply for Social Security benefits before ever claiming on insurance the policy), then my monthly payment would be, according to the broker, $1,400.00 plus 65% of $10.000.00 divided by 12 months, which
comes to $541.00 per month plus the $1,400.00 for a grand total of $1,941.00 per month, an amount far below my final salary. The offset provision, as described to me by the broker (on tape [they consented]) makes perfect sense, since supplemental insurance is designed to bridge gaps in income between what other sources pay (Social Security, Disability retirement, etc.) and the employees true final salary and were never designed to exceed the employees final salary.  This is why I only
purchased (at the behest of the broker) $40,000.00 of income insurance, because had I insured my full salary of $60,000.00, I would have been paying for income that was uninsurable, as it would have most likely caused the totality of my
benefits to exceed my final salary of $60,000.00.  Thus, 65% of $60,000.00 (insurance policy) is $39,000.00.  60% of $60,000.00 (my disability retirement in the first year) is $36,000.00, and since $39,000.00 plus $36,000.00 is $75,000.00, the insurance company would be well within their rights to reduce my payments by $15,000.00.  Thus, I would have bought more benefits than I was allowed to accrue under the terms of the policy.   Even if we calculate my medical retirement at 40% of my final salary ($24,000.00) which is what it drops to after the first year, and add on the full benefit of the insurance policy ($39,000.00), we end up with a total benefit of $63,000.00, still $3,000.00 over the allowable combined benefit ceiling on the policy. In short, the insurer would be well within their rights in reducing their payments to me by $3,000.00. 

So heres what actually happened.   After the broker and underwriter trying every dirty trick in the book to weasel out of paying on the policy they sold me, they relented under the pressure of my impeccably documented disability and threats to expose their shenanigans.  The problem is, they are re-interpreting the offset provision to mean it kicks in immediately (not after I reach $60,000.00 in combined benefits), not after I reach my full salary!  So, lets give them the benefit of the doubt
and say, for the sake of argument, I misunderstood the fine print.  Hang on to your hat as we go further and further down the rabbit hole.  If I purchased $10,000.00 worth of income insurance, and began receiving Disability benefits from Social Security in the amount of $1,400.00 per month, the insurer, under their current logic, would owe me absolutely nothing because 65% of
$10,000.00 divided by 12 months, is $541.00 per month, an amount far below what I am already receiving ($1,400.00). 

This is exactly what the insurer has done in my case.  Instead of applying the offset provision only after I reach my full final salary in combined benefits (Social Security, Disability retirement, insurance policy), they have applied it to my meager
Social Security Disability payments, reducing their payment to just 36% of what they actually owe me.  Heres the
math.  Instead of paying me the full benefit promised ($26,000.00 or $2,166.00 monthly [only to be reduced if I reach $60,000.00 in combined benefits]), they are paying me  $2,166.00 minus my Social Security benefit of $1,400.00 which comes to the paltry sum of just $766.00 per month!  Thus, by stealing $1,400.00 per month from me, they bag a nifty profit of $285,600.00 over the next 17 years; not too shabby.  Now you can see the fallacy of insuring the $10,000.00.  While the insurer makes a substantial savings in my case (64%), their savings on a policy holder who insured $10,000.00 would actually be 100%!  Not only are they preying on the disabled, they are sticking an increasingly insolvent Uncle Sam with part of the bill.