In Massachusetts, when you plan for your future, you may consider purchasing special insurance policies to cover unforeseen events. Insurance policies are complex legal documents with specific language that should be carefully read by its holder. When you create an estate plan, it is advisable to have experienced Massachusetts wills and estates attorneys at your side to assist with the creation and understanding of legal documents like a disability income policy.
The Commonwealth’s Appeals Court recently rendered a decision in Yunes vs. Unum Group (14-P-1871) regarding a disability income policy. The insurance company issued a disability policy to the holder that provided a benefit in the event that the holder became disabled at 64 but before the age of 65. If this event occurred, he was to receive $10,000 a month (including a cost of living adjustment) for 30 months. This was considered to be a “Total Disability Benefit.” Also included in the policy was a “Lifetime Total Disability Benefit Rider,” which was designed to provide additional benefits after the 30 month period of the Total Disability Benefit. However, this benefit distinguished between a disability by reason of injury and one by reason of sickness. The amount for an injury benefit included a cost of living adjustment in addition to the amount featured on the policy schedule. For sickness, the cost of living adjustment was also included, but the scheduled amount must be multiplied by a factor.
The policy holder submitted a claim under the policy and was approved for total disability benefits due to sickness when he turned 64. He received payments of $12,500 a month for his Total Disability Benefit, which eventually rose to $13,500 a month until its expiration. Upon its end, the calculation for the monthly Lifetime Disability payment was set at $1,350. The holder filed suit, alleging breach of contract, and sought a declaratory judgment, arguing that he was entitled to $12,500 a month for the remainder of his disabled life. As part of his justification, the holder pointed to a letter sent by the insurance company 10 years before the benefit was issued, which stated that the current benefit was for $12,500 after a 90-day waiting period for Total Disability, followed by $12,500 for his lifetime for accident or sickness. The letter also noted that the quoted benefit did not replace the actual contract issued by the insurance company.
The trial judge did not agree with the policy holder and found that $1,350 was the amount, per the policy, that was appropriate for the holder. The holder appealed, but the appellate court was not swayed by his argument either. The court felt the language of the policy was unambiguous. Upon reading the policy rider for Lifetime Disability for Sickness, and considering the agreed-upon facts that the holder was disabled due to sickness and had turned 65, the court felt the policy was issued as written. The $13,500 issued was multiplied by a 10% factor, which then produced the lifetime monthly amount of $1,350 per month, as long as the holder remains totally disabled. Even though it was different in its reasoning, the appellate court affirmed the judgment of the trial court.
The Massachusetts estate planning attorneys at Karsner & Meehan know that estate planners seek as much certainty and security for the future as possible. Our attorneys are here to help you with your planning. For a free, confidential consultation, contact our office at 508.822.6600.
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