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Buying Disability Insurance
When Your Health History Is Less Than Perfect
by Paul Baader

Anyone who is considering buying a disability insurance policy must remember to keep an open mind, and try to take a realistic approach to the underwriting process. The reality is that very few people come out of underwriting with a “Preferred” health risk discount, despite the fact that they may have recently been approved for their life insurance policy at the most favorable life insurance rating. There are dramatic differences between the underwriting process for a disability policy and a life insurance policy.

A life insurance company is evaluating the odds of an applicant passing away during the policy period, which can be fairly cut and dry. Alternatively, a disability insurance company must evaluate the possibility of the insured being prevented from performing the material and substantial duties of the insured’s regular occupation as the result of an accident or illness which is a much more difficult analysis.

For instance, back or neck pain, cancer history, chiropractic visits, use of anti-depressant medication, counseling, and countless other conditions all play a major role in the evaluation of your application. In some circumstances, an underwriter may feel that based on your medical history that you are too risky to insure for a disability. That being said, upon review of your medical history an underwriter may also decide that while you are insurable, your disability policy may be issued with a pre-existing condition exclusion, which can either be permanent or one which can be reviewed. If the medical history for a specific condition is severe enough, you can more than likely expect a permanent exclusion for said condition. However, if the underwriter is able to issue your policy with an exclusion which can be reviewed, then after a few years of no further symptoms, treatment or impairment from this condition with medical records documenting it, the exclusion may be re-evaluated by an underwriter to be removed from your policy. Also, depending on the specific condition, treatment, and recovery, an underwriter may decide to limit the benefit period applied for or extend the elimination period.

Any “good” agent will be able to tell you up front what you should and can expect during the underwriting process. By discussing your medical conditions early in the application process, your agent or broker can better inform the application process.