With major corporations slashing or withdrawing health care benefits from salary packages, cutting pension benefits and practicing blatant age discrimination when searching for employees, it's a tough time to be an employee, even if you're healthy. For those who have suffered injuries or become disabled, the consequences can be catastrophic.

The exploding costs of health care create financial chaos for those unfortunate enough to become disabled. Sadly, even those who try to insure themselves against disability are often denied the protection they have paid for.

At its most basic, disability insurance is coverage intended to provide 45 to 60 percent of gross income to workers who lose their wages due to a debilitating injury or illness. Disability insurance should, in theory, allow consumers to recoup enough of their wages to pay for their living expenses while they are disabled.

Unfortunately, it's often not that easy. Buying a policy can be difficult, as underwriters often demand extensive documentation of one's well-being. In general, only the healthiest need apply and, no surprise, pre-existing conditions are not covered.

There are differing forms of disability coverage, ranging from total disability, or "own-occupation" coverage, to "gainful occupation" coverage (being able to work but suffering limitations). The buyer can, in the words of DisabilityIncome.com, "expect to pay between 1-3% of your annual income in disability premium. There are many ways to increase or decrease the premium of a DI policy, and 1-3% is a generalization."

Difficult as it is, finding a disability plan can prove to be a lot easier than actually collecting long- or short-term disability benefits when illness or injury strikes. Insurers may demand exhaustive documentation, repeatedly "lose" that documentation and generally place as many roadblocks as possible in front of an already exhausted and financially desperate policyholder.

Vicki of Centralia, Washington, was on long-term disability (LTD) from Aetna for some time when she suddenly found her payments cut off for no reason.

"Aetna was paying the full 60% of my disability income, but then they just stopped, they said I was no longer disabled. However, they never contacted me or my doctor about it, THEY decided this long distance!"

Vicki contacted Aetna repeatedly and lost almost all of her material possessions in the meantime, as she could not work and couldn't afford her medical bills without Aetna's coverage.

"Finally, Aetna sent me to their own doctor, who got very mad at them, stating that not only was I still very sick (and on the verge of being hospitalized) but Aetna was making it worse by pulling the financial rug out from under me! They finally did reinstate me, and started paying me again, but it was too late. I had lost my house and down payment, belongings, and car. I was able to find another place to live but had to pay a huge fee to get into the house."

Vicki was forced to move hundreds of miles from her friends and family just to find an affordable place to live, and now lives in constant "fear and depression", barely able to eke out a living or pay her bills.

Carolyn of Concord, North Carolina, bought a disability policy from Unum. Not long after, she was diagnosed with multiple sclerosis.

"I was told I was a liar and knew all along I had this," she said in a complaint to ConsumerAffairs.com. "Now the medical bills are adding up and I am about to lose my home of 16 years. I want them to settle this now or explain to my children why they no longer can live in the only home they have ever lived in!"

Insurers' Sweaty Palms

The insurance industry's greatest fear appears to be that too many of its policyholders will become disabled and stay that way. To guard against that, they make it difficult to successfully claim disability and even harder to remain on the disability rolls. Many insurers demand frequent reassessments of the person's condition. Often they will simply stop paying and start the entire process from scratch.

Paige W., of Oxford, Wisconsin, was a regular advocate of purchasing and maintaining long-term disability in her job as a human resources manager. When she suffered a fall at work and endured several years of pain and unsuccessful medical treatments, her doctor finally recommended her for LTD from Hartford Life and Accident Insurance Company.

"After receiving the paperwork from [my doctor], they accepted the claim and paid 6 months of LTD. After that it was one reason after another to deny my claim," Paige said. "Not one thing had changed medically for me, but Hartford would say 'You have not provided sufficient proof of loss, or 'You have not provided suitable objective evidence of your condition', all those word games they play."

Paige eventually litigated to receive Social Security Disability, but still has to face serious legal bills as well as caring for her children and fighting to get the disability she believes Hartford owes her.

"I know that Hartford 'banks' on the plan that people will give up or die. Well, I can't. I have two small children who need me and they don't deserve all this either."

According to DisabilityInsuranceProtection.com's Frequently Asked Questions (FAQ) page, "[I]f you are currently in good health, you should have no difficulty qualifying for a policy. However, if your health declines or if you experience a disability, you may no longer be insurable (if you are still insurable, it will certainly be at a higher premium)."

This is often referred to as "adverse selection." As one insurance agent puts it, "Only the sick people want the coverage, which makes it expensive, which drives out the healthy people who think it's just not worth it." In other words, healthy customers will be paying large sums of money to be covered in case they are injuredbut once they ARE injured, all bets are off.

Such was the fate of Nadaleen B., of Painesville Township, OH, who was the victim of a terrible car accident in December 2004.

According to her husband, Nadaleen's doctor diagnosed her with several bulging cervical discs in her spine, causing her frequent headaches and limiting her mobility. Nadaleen received both LTD and short-term disability (STD) coverage from MetLife, but "We had only received 2 checks from them, and then they stopped paying benefits."

Nadaleen's husband contacted her caseworker repeatedly, to no avail. After repeated faxes, phone calls, and emails to her caseworker, supervisors, and further up the chain, Nadaleen's coverage was still denied, and with bills mounting in their household, she had to consider returning to work against her doctor's recommendation.

"Nadaleen is still in lot of pain. We depend on 2 incomes to meet our mortgage, car payment, utility bills, and groceries. We only have my income at the moment and are being stretched to the limit financially and emotionally," her husband said.

Planning for the Unplanned

If disability insurance doesn't fulfill its promise of providing income for the injured or disabled while they recuperate and rebuild their lives, what are the best options for consumers?

You might consider long-term care insurance as opposed to disability. Long-term care insurance covers the needs of the disabled and the elderly alike. The U.S. Government Accountability Office estimates that 40 percent of the 13 million people receiving long-term care services are between the ages of 18 and 64.

As opposed to providing income replacement for the disabled or injured, long-term care insurance pays for the basic daily living services an individual needs when physically and mentally impaired. Of course, it pays nothing to replace your salary but given the uncertainty of collecting disability payments, this may not be a serious drawback.

With the consumer protections stipulated by the Health Insurance Portability and Accountability Act (HIPAA), long-term care purchasers can deduct the expenses from their income tax returns as they would auto or medical insurance. However, long-term health care insurance is not a "cure-all" any more than disability insurance, and may be subject to as many stipulations.

In the view of one insurance industry member, disability insurance best serves the self-employed or workers who stand to lose a great deal from injury or a disabling condition.

"There is a self-employed guy who is a machinist and he needs his hands to weld and such to run his machinery business. Disability insurance might be very useful for him if he got into some sort of accident, like slipping in the snow or something, and badly damages his hand," said one industry insider. "The machinist might have long term care insurance, but it would not be able to use it in this instance since he only lost the use of his hand and does not need to be in a nursing home."

Whether the options are disability, long-term care, or both, only the informed consumer stands a chance of purchasing the plan that's best for them. The following are basic tactics to keep in mind when looking for the right insurance coverage:

• Shop smart, look around. Look at price and option comparisons from as many insurance companies as you can. Use the price and reliability indexes from rating companies like Standard and Poor's or Moody's. (Keep in mind that these companies, like credit bureaus, use differing criteria to make their judgments, so don't go with any single company's recommendation.)

• Figure out how much coverage you need. Be realistic; if you become permanently disabled, your standard of living will inevitably decline. The trick is to make that decline manageable. Find out what level of coverage your employer provides, then decide if you need more. If you are self-employed or an independent contractor, see if you qualify for a group plan through a professional or trade association.

• Ask questions, read the policy. Your life and health are more important to you than to anyone else. When dealing with an agent, ask all the questions you feel need to be answered. Make sure the agent gives you plenty of options. Get plenty of quotes from good companies. Then, read the policies. Yes, they're boring and hard to read but only what is actually written in the policy means anything; your agent's words and earnest assurances are dust in the wind; verbal promises mean nothing.

• Do the math. Talk to your tax advisor or financial planner to determine what you can afford and what you think you will need to get by if you become disabled. Long-term and disability insurance providers offer estimates based on age, income, medical history, and investment records, so your entire financial portfolio will come into play when determining the best option for your care.

• Think decades, not years. You may be paying on a policy for 20 or more years so be sure to factor inflation into the benefit package you choose.

• Buy from major, AAA-rated insurers. This is no time to look for a spunky underdog. You want to buy from a company that will still be in business when you need to file a claim.

For More Information

Purchasing long-term or disability insurance is a comprehensive and complex process, one which cannot be easily addressed in a single article. There are numerous resources available to consumers interested in choosing the right long-term coverage option, including:

• The Insurance Information Institute Contains thorough breakdowns of every type of insurance you can purchase, as well as tools to compare prices, find insurance agents, and defining insurance terms.

• America's Health Insurance Plans Though this site is slanted towards the insurer's viewpoint, its "Consumer Information" section provides valuable guides to each major insurance category.

• The U.S. Administration on Aging An office of the government's Department of Health and Human Services, AOA provides a wide range of information and resources for older Americans, particularly relating to insurance of all sorts.

• ConsumerAffairs.com's Insurance Section You've heard your agent's sales pitch. ConsumerAffairs.com gives you the rest of the story -- the real experiences of consumers, told in their own words.