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Zero day residual provides coverage for partial disabilities

This month's ancillary idea is intended to clarify the most commonly misunderstood provision in group disability coverage.  Almost every carrier puts it in their proposals, many brokers request that it be included in their RFP's, and if it's left out of a contract, you might be in for a very difficult scenario if a claim is filed.  I'm referring to zero day residual.  I would say 5% or less of the people selling group disability really have a grasp on the concept.  Here's the good news.  The provision is really easy to understand, which makes this month's idea very short:

 

Zero day residual provides coverage for partial disabilities in the qualifying period of a claim. This means that a claimant can use partial days of work to satisfy the qualifying period for both STD and LTD.

 

Without zero day residual, you have to be totally disabled in order for your qualifying period to start.  Why does this matter?  Because many claimants aren't totally disabled on day 1 of a claim.  Especially in scenarios like disabilities that result from cancer (one of the leading causes of LTD claims).  In contracts without zero day residual, those partially disabled claimants wouldn't even be able to get the clock ticking on their qualifying period, and certainly wouldn't receive a benefit.

Couple this with a contract that requires the loss of all of the material and substantial duties of a claimant's occupation to qualify as disabled, and you better be incapacitated if you want to think about filing a claim.

Now for more good news.  Almost every decent disability carrier includes zero day residual standard.

 

However, in recent months I've seen a few carriers remove this provision on STD or LTD in order to lower a rate.  I even had one broker get burned on a claim because their carrier rep did this without telling them.  The moral of the story is simple.  Any good carrier rep should include zero day residual on both STD and LTD unless otherwise requested.  If you catch your rep removing this provision without telling you, don't work with that rep.

Ancillary products can be complicated.  You have to trust that your reps are always doing what is in the best interest of you and your clients.  If you don't have that trust, you might as well just be getting your quotes direct from the carrier.

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