24-Aug-2007: Insurance?
In January 1998 I started a new phase of my career. I was no longer going to be someone's employee. I would work as
a free-lance independent self-employed consultant. It worked out well. I was never without a contract, and sometimes
worked on two or more at the same time, until I suffered that nervous breakdown in June 2004. What being independent
meant to me was that no longer were companies going to pay me $65,000/year while billing clients between $500 and $600/day
for my services. I'd collect my own billables and be responsible for my own expenses and taxes. I realized that I would be
lucky to net what my salary had been, despite billing in the $450-$500/day range. But, there were other advantages, such as
being able to write off expenses that employees cannot (such as travel).
I often had employees point out how expensive I was and suggest that I was rolling in money. The fact is, it is cheaper
to pay a contractor $10,000/month than it is to pay an employee a salary in the $65,000-$75,000 range. Plus, employers don't have
all the expenses associated with layoffs; all they need do is simply not renew a contract. Employees often do not
realize how much it costs their employer to keep them on because the costs are hidden in "overhead." Overhead includes
such things (in Canada) of the employer's contributions to vacation pay, to group medical insurance plans, to pension plans, to the Canada Pension Plan and to Employment Insurance.
There is a head tax as well per employee. Not to mention the costs associated with providing a work space and tools associated with the job.
Employees have told me they couldn't stand the stress of knowing when your contract expires. My answer to that was that at least
I knew when I'd have to start looking for something else, rather than be blind-sided by an unexpected layoff—something which was happening regularly in the field I worked in.
But,—you knew there was a but coming, didn't you?—
remember the list of things above that employers have to pay above and beyond an employee's salary? For a self-employed person some things don't apply, like payments
into Employment Insurance (because self-employed persons are automatically disqualified from collecting from this government-run income insurance plan). Others things,
like medical insurance must be paid for as an individual rather than as part of a group plan. That is a major expense, believe me.
Like I said, it was working well for me. After several months, my wife, unhappy with her position as an employee, also decided to go freelance. She still has
more work than she can handle. Then the issue of long-term disability came up, especially as we were now both dependant on our physical ability to actually do the
work required for our specialities. We had no kind-hearted employers with long-term insurance or the willingness to tailor the work to our diminished abilities.
After waiting for more than a year to establish our baselines for income, we took out a policy with a major insurance company that would pay out
$2,000/month if I suffered a long term illness or injury and could not work. We chose to insure only me because I was the higher income earner and
we could not afford two policies. That was the spring of 1999. We dutifully paid our monthly premiums, plus an extra premium that would eliminate the one month
waiting period if I made a claim. I never expected to collect, but, you never know: a car accident might lay me up for a few months and it would be better to
have some money coming in than none.
Fast forward to the spring/summer of 2004. I found myself in a position where I could not work in my speciality because of illness. Suddenly my income dropped
from about $10,000/month to nothing. It was a major trauma for our entire family and we are still suffering from some of the fallout. I followed my doctor's directions
and took the pills he prescribed. We decided to sell our home and purchase a B&B then, rather than wait for full retirement as we had planned. I thought to myself,
okay, I've been knocked off my feet here, but with the meds and a change of scenery I'll be as good as new. It never once occurred to me that I was disabled.
I worked preparing income tax returns and doing some personal computer consulting work during the winter of 2005 while I negotiated a $500/day contract with a company in Ottawa. As far as I knew, I'd be back to
my old routine within a few months. It didn't quite work like that. The awarding of the contract (for the federal Corrections Canada department) was delayed, and delayed again.
I had worked for about nine months before in that department and had a very negative experience. My anxiety levels started shooting up because of the delay in awarding the
contract and my dread at returning to a place where people would lie directly to my face and engage in secret backstabbing cabals. I was still taking my medications from
the previous year, but I was soaking the bed with sweat every night from dreadful nightmares. I was tired all the time. I was overly-sensitive to anything that I could
interpret as criticism. I was impatient and flew off the handle with very little provocation. When speaking with someone I could not sit still. I would be up, pacing about,
gesticulating. My hands trembled almost all the time. I could not read novels. I consulted my doctor and told him what was going on. He increased my medications
and said I should not return to work at that time.
On discussing this state of affairs, my wife remembered the insurance policy that we were still paying premiums on. Here I was on doctor's orders not to
return to work, clearly disturbed and unable to function in any productive way. So, I applied to collect the insurance. I included the names of my doctors and figured that was that.
Ha! For the next eleven and a half months I was hounded by the insurance company. They requested the same documentation over and over again. My medicals files
from Quebec were faxed to them a total of nine times altogether before they admitted to receiving them—and the only reason they had to acknowledge that was because
I was on the telephone with both ends of the Fax being sent and received. I was questioned in great detail about my life prior to my taking out the insurance plan. Details were
twisted and required me to correct them. (At one point, they put together a narrative that said I was an alcoholic and was involved in a car accident as
a result. Another time they seemed convinced that I had been hospitalized for psychological illness three times within the past ten years—which came as a great
surprise to my family and friends.) My efforts to straighten things out only seemed to make them worse. I was telephoned early in the morning and asked detailed
questions about my finances while I struggled to shake off another nightmare. There was a suggestion that I had hidden investments that were paying huge dividends. They demanded
the name of a psychologist I had seen in the summer of 2004, even though they had a copy of her assessment on file. I was made to feel like a low-life,
lying, con man all the time they were speaking so sweetly to me. (Remember I was still seriously ill throughout all this.)
We started looking around for a lawyer during the summer of 2006, but we couldn't find any willing to take on a disability case against a big insurance company. Then, my wife saw an ad for a lawyer
who specializes in the very kind of case we had. At our first meeting he told us that what we had experienced was the standard modus operandi by insurance companies. They
act like they are sympathetic and doing their best for you, when in reality they are finding every excuse they can to delay settlement. The reason: when a year has elapsed after the initial
claim, you can no longer sue. We were two weeks away from that deadline.
Eleven months after we first contacted the lawyer our case was settled out of court. We would have liked more, but what we got is enough to help reduce our
monthly expenses and do some badly-needed enhancements to the B&B. For me, the relief has been enormous. Not only had we lined up an expert witness who would testify
that I was, and still am, disabled and capable of handling only low-pressure work, the insurance company's own expert had written that I should not return to consulting work at the time he interviewed me! Though I always knew
I was not "faking" or exaggerating symptoms, it was good to have that much "official" endorsement. Also, the final settlement gave me a sense of freedom. I no longer
have to worry that word will get back to the insurance company that I was seen smiling and laughing—and so couldn't be depressed. And, I no longer have to
watch every word I might say in public (such as in this blog), in case the insurance company could use it against me.
The moral: forget "wage loss replacement" insurance. We would have been further ahead to invest the premiums ourselves. I know, that takes discipline—something I am
short of. But, especially, don't bother with extra premiums to speed up claims. We had such a clause and it took almost two years from the date of the claim until we saw any money.
I am left with my dignity intact. Look at my restraint in not naming the insurance company. Actually, it doesn't matter whether I name them or not, because
apparently they all act in the same way.