Cancel LTD in mat leave? Don’t miss this step
BY Bev Cline | November 8, 2012
When a pregnant plan member wants to cancel their long term disability coverage during her maternity leave, it's critical that you discuss why this is not the best idea, even though it can save her a little money in the short term.
Thereafter, if the plan member decides to discontinue LTD during maternity leave, the decision should be recorded in writing, according to Susan Cranston, assistant vice-president group small business, marketing & advisor services at Manulife Financial.
"From the plan sponsor's perspective, if a plan member is going to opt out of coverage during maternity leave, the advisor should suggest that his/her client get the plan member's decision in writing, with an acknowledgement that the plan member has been advised of the potential repercussions," she says.
The plan sponsor doesn't want to find himself in a position where a plan member is able to say, 'I'd never have opted out if I'd known,' she adds. "For this reason, the advisor needs to inform the plan sponsor about the repercussions so that the sponsor can inform the member."
Cranston says that even if the plan member has an individual disability policy in place and has decided to opt out, the plan sponsor will still want to get this decision in writing and signed.
After all, at no other time in a woman's life is she fully aware of the significant health (delivering a baby) event she will undertake in the coming months. A delivery has the potential to result in a number of conditions, such as surgery (c-section), birth complications, or possible debilitating disability due to mental health issues, like postpartum depression.
To not continue coverage with this knowledge and fore warning is arguably irresponsible and an advisors role to communicate clearly to pregnant women. If they still insist on stopping coverage, protect your client and yourself by having them sign off on a document that says they know and understand the risks associated with not having LTD coverage during their maternity leave.
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