Archive for the ‘Settlements’ Category

Unum’s “Unenlightened Sources”

You have to wonder sometimes when Unum’s reps or resources continually use the wrong words to describe things.

Recently, an insured was contacted by a Unum settlement specialist who continually made mention that he had to find out whether the insured was “insurable or not”. Oops…wrong word…claimant is already insured.

What the rep was no doubt trying to say is, “he needed to find out whether the insured was still eligible for benefits.” It’s pretty scary when an insurance rep doesn’t know the difference.

Using the wrong words has always been one of my “you’ve GOT to be kidding me moments” particularly when insurance reps show their ignorance. If you are covered by an employer ERISA group Plan, you are a Certificate holder, participating in a Plan, and you are a claimant. Your file is referred to as the Administrative Record, and your policy per se is called a Plan.

ERISA entitles you to an appeal and full disclosure of the Administrative Record. Your Plan has a federal jurisdiction and you are not entitled to punitive damages.

Conversely, if you purchased an Individual Disability Income Policy on your own, you are referred to as the insured, you have a policy and a claim file, and are generally NOT entitled to appeals and disclosures although most insurers will give you the chance to submit additional information. Guardian, for example never disclosed it’s claim file outside of litigation.

Your policy has a state jurisdiction and you are entitled to punitive damages as awarded by the court in each state according to statue limitations.

All of the above is a very basic vocabulary that one could assume insurance reps would know. Please note the general public wouldn’t necessarily know the right words to use, but expert insurance companies should, of course, know the difference.

Although some might be tempted to say, “What’s the difference anyway?”, it does seem appropriate that insurance reps who have accountability for paying or denying claims, should know the difference. If they don’t know, I’m happy to politely correct them.




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Once again the issue of Unum lump-sum settlements has been brought to my attention. Where before, Unum always considered requests for settlements, it now appears the company is using settlement requests to engage in claim investigations that could result in termination rather than settlement.

Rumor has it that Unum fired much of its settlement staff and may be outsourcing settlements to a company like Lucens who is now paper chasing SSDI files. In any event, DCS, Inc. was informed some time ago that Unum’s Financial Settlement area was using settlement requests to open up new investigations. Therefore, while Unum’s settlement offer letters still read, “as an option”, it’s clear Unum’s settlement motives are much more sinister.

Today, it is virtually impossible for insureds to invest a lump-sum settlement at the offered discount rate to yield future value. So while Unum profits by at least a 20% financial reserve gain with each settlement, insureds are scrambling to find secure investment opportunities earring greater than 1% interest.

In reality, insureds are unable to realize policy future values and real losses take place. Unum rarely, if ever, offers 100% of NPV (net present value), another realized loss for the insured. Those who are accepting Unum’s offers of settlement are losing a percentage of current value in addition to a percentage of future value.

Whether or not to accept a disability claim settlement is a “life” decision, not only a claim decision. Those who have other sources of income, investments and equity might be able to live on Unum’s offer of settlement; however, those who depend month by month on the lump-sum will never have enough money to maximum duration of claim, or SSR, or normal retirement age.

Yes, there are those insureds who tell me, “Linda, I have to get out from this nasty company. I don’t care if I lose value, I just want out.” This is a very different reason for accepting settlement, but one must be careful not to shoot himself in the foot. The first priority is to put pencil to paper and find out whether the numbers work out for your future support. If not, you have your answer regardless of how disgusted you are with Unum.

Unum isn’t a good prospect for settlement anymore. I actually do a great deal of settlement counseling, and basically the information remains the same.

You may not believe this but sometimes after an accepted settlement people literally “freak out” when the checks stop coming to the bank. It doesn’t make any difference that they have a lump-sum, emotionally, the security of getting a check every month is comforting – without it, frightening. If this is the case, a settlement is not for you.

While I have somewhat supported Unum settlements in the past, I no longer recommend them, if only for economic reasons. Unum needs to get its company act together and become a bit more organized and less chaotic.

Please consider any Unum settlement decision very carefully before signing on that dotted line. In most cases, a Unum settlement isn’t worth it.



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Buy outMost insureds I’ve spoken to in the last several months are looking for Unum settlements to, as they put it, “get out from under Unum’s harassment schemes.”

While this may seem a good idea as you look out through your window at a HUB surveillance vehicle focused on your house, an insurance settlement may not be the right decision your you.

Unum seems to be adhering to several internal criteria limiting claims that potentially could be offered settlements. First, before a lump-sum settlement is made, Unum will want to close the door on any outstanding SSDI issues. This means insureds and claimants need to be awarded SSDI, overpayments repaid, and/or for DI insureds, Supplemental Rider dependent coverage must also be resolved.

Although Unum settlements can offered to “resolve” overpayment issues, it does appear that Unum’s preference is in resolving SSDI before making settlement offers.

High mortality claims are often not offered settlements because Unum may choose to “wait it out” to determine the likelihood of an insured’s survival. Impairments such as heart transplants and cancer could eliminate the possibility of settlement offers, or at best delay offers for a period of time. I know it sounds awful for an insurance company to expect mortality, but when it comes to offering settlements, Unum and other insurers will always take the “self-interest” point of view.

Unum does not generally offer lump sum settlements until the company has exhausted every possible risk activity to deny claims first. Once the company is convinced, however, that it will have liability for the claim to maximum duration, settlement offers can be made.

Currently, insureds should be able to invest the present value settlement at x interest rate (4-4.5 percent) to receive the future value of their policy. Since the American economy is operating in 1% to negative interest rates, there are no safe investments yielding 4.5%.

This means that insureds will never be able to yield 100% of the future value of their claims over time. Money market rates are 1% and below with IRA’s yielding slightly above 2.5%. In addition, Unum will never settle a claim for greater than 80% of the claim’s financial reserve. For this reason, the company will only offer a percentage of the net present value (npv) depending on how close the company is willing to get to the 80% reserve maximum.

However…………America has a new administration in the White House that has promised to repair the economy. In researching this topic and listening to Steve Forbes interviews, it is entirely possible that with the opening of free trade markets and establishment of positive interest rates (higher), insurance settlement discount rates would be lower, higher settlement offers, and future yields much closer to actual values.

Wouldn’t it make more sense for insureds to give the economy a chance to improve before considering lump sum settlements that highly devalue future values of policies? Although we cannot predict for certain how the economy will react to changes in the future, it does make more sense for insureds and claimants not to jump on current settlement offers when economic change could produce more reasonable results.

For all of these reasons DCS recommends caution when considering Unum’s year-end lump-sum settlement offers. Current settlement offers may be considerably below present value with little investment opportunity to earn reasonable interest to yield even close to future values.

Future US economic models could bring higher interest rates to investors in the future making it possible for insureds to receive better investment yields on insurance lump-sum settlements.

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Attorney at Law



I think this article is more about attorneys than UnumProvident. Sometimes settlement just isn’t the way to go.

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Bad dudesI can honestly say that information I’ve been receiving through calls and emails to DCS continues to confirm Unum as a very, very nasty insurance company. So nasty in fact that the company appears to be making claims decisions without any reasonable or substantial proof that EDU insureds and claimants are no longer disabled according to the policy.

Not only does the company target and deny legitimate claims, but it does so openly, deliberately, and without any kind of accountability from state regulators. Unum is the worst disability insurer there is and employers need to take second and third  due diligence look before signing on the dotted line with this company.

Mr. S. emailed DCS to inform me that he had been on Unum claim for nearly 22 years. For the first 10 years of benefits Mr. S. never received any communication or requests for information from Unum, although he did receive phone calls occasionally. Approximately 11 years later (yesterday), Mr. S. received a letter from Unum paying him 6 months of what it called, “extra contractual assistance” and informing him it determined he had work capacity. The claim was closed.

Unum’s strategy here is called an “Advance Pay and Close.” Typically, the company’s Benefit Manual described “conditions” under which an Advance Pay and Close could be used such as: 1) the claimant had to be released to work by treating physicians, 2) an employer had to verify a confirmed date of return to work, and 3) the claimant had to agree to it.

Either Unum’s criteria for AP&C has significantly changed, or the company is not following its own claims procedures manual. Mr. S., of course, confirmed with his physician that he had NOT been released to work in any capacity, and since there was no employer of record confirming a return to work date, Mr. S. became, as he put it, “mad as hell.”

How a claimant who is totally disabled for 21 years suddenly becomes fully able to return to work full-time I don’t know. It’s more likely Mr. S. remains totally disabled than able to work. Also, it’s obvious that Unum had Mr. S’s file reviewed by its own “Med Men” who, in its own opinion, decided in 6 months Mr. S. would have work capacity. How does THAT happen? Work capacity determination is totally up to Unum now?

Another awful thing about Unum’s AP&Cs are that since the strategy is technically not a denial but more like a settlement, no appeal instructions or rights are written into the letter. Claimants are unaware they have the right of appeal and just take the money.

Allow me to point out a few things here as well. First, the reference to “extra contractual assistance” is deliberately intended to communicate the idea that Unum’s payment of six months of benefits is a GOOD thing, and to the benefit of claimants.

“See what Unum is doing for you”, is clearly the message, even though the loss of future benefits may be significant. Unum is also aware that “throwing money at claimants” who are probably behind in their bills and may have significant debt will be accepted regardless of the loss of future benefits.  Does Unum really think you are that foolish?  Of course it does!

Paying claims in the Extended Duration Unit (EDU) for 21 years and then suddenly reversing its position is clearly arbitrary and capricious, and an obvious abuse of discretion. AP&Cs are primarily sent to ERISA Plan participants so to omit a writing of ERISA appeal rights is a violation, in my opinion.

Unum’s management uses the argument that an AP&C is a “mini settlement” not a denial and therefore citation of appeal rights isn’t necessary. BUT, wouldn’t claimants have to agree to a settlement? Unum can’t technically “settle” a claim without claimant buy-in can they? Well, apparently they can.

Unum AP&Cs should be reported to state departments of insurance, the US Department of Labor, and a good ERISA attorney found for the appeal. The bad thing about retaining attorneys is that AP&Cs are offered to the ERISA folks with smaller monthly benefits insufficient to encourage attorney interest. Unum knows that too.

The bottom line is that Unum’s AP&Cs of late do not consider recommendations of treating physicians but are based upon Unum’s misrepresented and “snatched” medical review only. For Mr. S. there was no treating physician buy-in – no return to work release, just Unum’s opinion. The company may be using its computer generated MDA program to arbitrarily decide when a “normal recovery period” is. (By the way, there is no such thing as a normal recovery period.)

There should be documented reasons in the Administrative record validating any claimant has full-time work capacity. In addition, if Unum’s AP&C is considered a settlement, then the buy-out can only take place with the claimant’s approval. You can’t “settle” anything without a meeting of the minds.

Then, there’s the group of Unum claimants (as Unum suspected) who see the $ signs of 6 months of benefits and take the money, forfeiting benefits to age 65. I suspect most of them do not realize they even have the right of appeal, because Unum doesn’t tell them they do. I still speak to claimants who believe everything Unum says and fear denial if they don’t comply.

Remember, Unum likes to use that fear factor and sometimes it’s successful.

AP&C letters should be appealed, the claim file requested (to find out what the AP&C was based on), and the money saved in an interest-bearing account, but unspent. Send a copy of the letter to your state DOI  and regional DOL explaining neither you nor your physician had any say about the allegation of return to work, and that you did not buy-in to settle the claim.

Unum’s AP&C is largely “playing” to your need for cash and the fear you have about accepting Unum’s decisions without a fight. As always, Unum’s tactics hide in plain sight as coming from the “good guys”, but in reality are intended to do harm for the sake of profitability.

In my opinion, attacking the EDU may be an indication of how desperate Unum is to deny more claims and record increased profitability. It’s not reasonable to assert old claimants on claim for 21 years have the ability to return unrestricted to full-time work. It’s my hope that a few judges or state authorities have an opportunity to take a look at this, and slap Unum with more fines.

In my opinion, Unum Group is without a doubt the most unfair and egregious disability company in the United States. Why do employers keep buying this stuff?

I think its pretty obvious Unum never was a “good guy”, and an AP&C doesn’t make them one.

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Unum Settlements – What the……?

Buy outUnum’s current settlement procedures probably could be described as the most convoluted process one can imagine. Internally, the process of offering and acceptance of lump-sum settlements strikes me as “ass-backwards” (sorry).

To begin the process, Unum sends insureds offers of settlement via letters that include monetary offers of settlement, discount rates, future and present value, mortality, and other comments about taking no responsibility for taxes. Attached to the letter is a “Questionnaire” that can best be described as an underwriting document asking about perils and hazards very similar to what is completed by insureds who buy life insurance.

Insureds are asked, “Are you overweight?”, “Do you smoke?”, and “Do you engage in dangerous activities?” The questionnaire seems after-the-fact since Unum’s letter already mentions calculated mortality values. One might question, “Well, is the offer contained in the letter still on the table?”

Maybe not. According to one attorney resource, Unum’s explanation is that if the insured accepts the offer and sends back the questionnaire, Unum will either “Approve” the insured’s acceptance, or “Withdraw” the offer based on the additional information provided. Doesn’t this seem a bit backwards? If Unum wants to “underwrite” the settlement so to speak, shouldn’t the Questionnaire be sent prior to making any offer?

In the last six months Unum’s sudden withdrawal of settlement offers for no other reason than “we changed our mind”, and, “now we want to do an any occupation investigation”, or some other risk management activity, leaves insureds distrustful of Unum settlement offers – and they should be.

There have also been reports that Unum’s present value figures don’t always add up. Present value is a mathematical computation and given the same set of variables the answer should always be the same. Some time ago, a settlement rep admitted changing cited present values for “common or shared claims” in order to cite figures less than the combined present value of multiple claims. Since when was this considered fair?

The obvious here may be that Unum attempts to get insureds so excited about the prospect of settlement that they are more inclined to answer questions that normally would have nothing to do with disability insurance. Information reported to DCS last year indicated that Unum offers of settlement are no longer “options” to benefit insureds, but just another way to risk manage claims to denial.

Clearly,  the idea that Unum offers a settlement figure first, but only approves the insured’s acceptance when the additional information provided is received, is the result of using settlements to gain denial advantage.

The current process is full of deception and Unum insureds should be wary of settlement offers that aren’t really offers at all. The process seems to suggest inducement to provide “peril and hazard” life underwriting information that can be used to deny claims, not settle them.

No wonder Unum can pay out yearly bonuses when even the settlement process is corrupt with deception. Insureds and claimants should be very careful in managing Unum’s settlement offers. The process may not be what it seems.

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FearAn interesting and unusual pattern regarding disability settlements seems to have emerged among those who are offered claim settlements, and often those who accept settlement, but regret the decision later. The “pattern” involves conditioned thinking involving the actual receipt of paper monthly checks or verification that money has been received in the bank.

Some insureds “condition” themselves into false safety zones when benefit checks are received in the mail, or benefits appear in the bank on a regular basis. Benefit checks become the ultimate triggers to feelings of safety, and life can only go on peacefully for about three weeks after checks are received. In the fourth week, claimants begin to feel butterflies in their stomachs, insomnia and stress of anticipation until the next check arrives when everything is OK again for the next three weeks.

In general, these insureds rely on benefit checks and there is no other source of family income. The actual physical receipt of a benefit check becomes a timely habit, or trigger of safety. The opposite is also true. The absence of monthly benefit checks causes varying degrees of panic, stress, nausea, stomach pains, insomnia, and fear of loss of income until checks finally arrive late a few days later. Habits and unrealistic perceptions are very difficult to live with and take approximately 30 days to permanently change.

What appears to be happening is that some insureds are turning down offers of settlement when they begin to realize there will be no more “check in the mail.” The very idea that monthly checks will stop creates panic and “unsettled feelings” that there will be no future “safety zone”, or, that they will have to remove 1  month’s worth of benefits from the settlement amount each month.

Some insureds accept offers of lump-sum settlement but become panicked when the next check doesn’t arrive in the mail. “It’s not enough, it’s not enough”, one claimant cried, “I should never have taken the settlement. I felt more secure and less stressed when I received my monthly benefit in the mail each month. Now, I just feel scared when the check doesn’t arrive when it is supposed to. I wish I had not taken the settlement.”

And there we have it – a perfect description of the cycle of fear and stress until checks are received, followed by feelings of security and safety until the next check is expected. This type of behavior is conditioned, meaning we do it to ourselves by accepting the cycle as normal while receiving disability benefits. This is why many claimants may find themselves panicked even when there is a large sum of settlement money sitting in their checking accounts.

Human beings are creatures of habit, both physically and mentally. The stress of going out on disability and depending on third-party insurance companies for money is easier to accept and manage when they become habits of fortune in daily lives. Physical and mental “habits” take approximately 30 days to change, and claimants CAN change the way they feel about “checks in the mail.” After all, we are what we do, and what we think.

experimentLet’s try a Linda Nee experiment to show you the extent to which we develop unconscious habits.

Sit in a chair comfortably and fold your arms. Look down to see which arm is on top. Unfold your arms. Then, try folding your arms again placing the opposite arm on top. Some people have some difficulty doing this. When did you pick up this habit?

Another example is to sit in a chair and cross your legs. Again, look to see which leg you automatically put on top. Uncross your legs and cross again with the opposite leg on top. This probably feels rather uncomfortable.

We condition our thinking in many of the same ways. No benefit check – stress and fear, check arrives – feelings of relief and safety – check due to arrive, feelings of stressful anticipation. Thoughts and patterns of thinking can also become habits that take 30 days to change.

With respect to insurance settlements some insureds and claimants aren’t good psychological candidates for settlement because of their mental conditioning or patterns of thinking that cause severe reactions when the process of receiving monthly benefit checks is interrupted, such as “there is no more benefit check in the mail.”

Another insured who accepted settlement told me, “I used to feel great after I received my benefit check each month. Now, I feel constantly worried that I won’t have enough money.” Insurance settlements should help insureds feel more independent, and able to obtain a quality of life they didn’t have when under the control of an insurance company.

Clearly, disability settlements aren’t for everyone, particularly those who have mentally conditioned themselves to feel safe and secure once “the check arrives in the mail.” I can imagine it might be pretty scary after accepting a settlement to stop the conditioned cycle of fear, relief, fear, relief.

Claimants can change “thinking habits” over time, but it becomes more difficult when the only source of income is in the form of a benefit check. Insureds and claimants who today are in the cycle of accepting their fears concerning benefit checks probably should consider very carefully what it will be like after settlement when checks no longer arrive in the mail or in the bank.

Can you make that work? If not, then a disability claim settlement is not for you. Although “mental conditioning” can be changed in about 30 days with deliberate efforts to change what you think, many insureds find it difficult when the pressure of not having any money becomes a priority.

The lesson here is that disability settlements aren’t for everyone, particularly those who have mentally conditioned themselves to accept as normal that “checks in the mail” signal relief and safety, until its time to worry again next month.

I have often said that disability settlements are “life decisions”, not claim decisions. Those who have signed on the settlement dotted line and are feeling panicked should give themselves 30 days to unlearn old thinking and adopt new realizations of freedom and independence that settlements bring to the table.

If you’ve been approached with an insurance settlement, try to image what your reaction will be to not receiving a check each month. If you can’t live without regular checks arriving in the mail or bank, my advice would be to not sign on the settlement dotted line.

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