The amount of individual disability insurance that you can purchase is based on your taxable income. Because of this, you must report your income for the past 2 years, as well as year-to-date. The underwriter will want to see a history of income to ensure that you are a good risk. They look at the history to make sure that you did not have one good or bad year financially. Business owners should be sure to report net income after expenses, not gross.
Things That Work Against You
Some applicants have unearned income from rental properties, investments, or other sources. Since this unearned income will continue whether or not the person is working, it can count against how much coverage they qualify for.
High net worth and bankruptcy can have an impact on an applicant’s ability to get a policy. Generally, if an applicant has a net worth in excess of $10,000,000, their need for disability insurance is not as significant, and most major carriers will not issue a policy.
In order to be approved for a policy like the Provider Choice, you are going to need to be in relatively good health. The application for disability insurance coverage contains many questions about pre-existing conditions and medical history. It is very important to answer these questions in detail and honestly.
The companies are going to review your medical records whenever they think it is necessary. They will be able to see all of the prescriptions you have filled, so providing them with a high level of detail on every medical issue you have had will make them feel more comfortable about offering you a policy.
Many insurance companies are moving toward a professional service to conduct medical questions. In these cases, your agent might not ask you many questions regarding your health; instead, allowing the representative of the insurance company to call you and ask these detailed questions.
The results of the medical underwriting portion of the application often dictate whether or not an applicant can get a policy, and what that policy will look like. Often times, any pre-existing medical conditions are excluded from coverage. If you are offered a policy with a pre-existing exclusion be sure to talk with your agent about it, and fully understand why it is required.
Once you have decided which policy is best for you, be sure you work with your agent to completely and accurately fill out the application. Doing so will ensure you get the best offer on your coverage and a policy that will perform as you intended.
This material contains the current opinions of the author but not necessarily those of Guardian or its subsidiaries and such opinions are subject to change without notice.
William Olmsted is a Registered Representative of Park Avenue Securities LLC (PAS). Securities products offered through PAS, member FINRA, SIPC. Financial Representative of The Guardian Life Insurance Company of America® (Guardian), New York, NY. PAS is an indirect, wholly-owned subsidiary of Guardian. Financial Balance Group, LLC is not an affiliate or subsidiary of PAS or Guardian.
Individual disability insurance policy Forms 18ID, 18UD and 18GI underwritten and issued by Berkshire Life Insurance Company of America, Pittsfield, MA, a wholly-owned stock subsidiary of The Guardian Life Insurance Company of America, New York, NY. Product provisions and availability may vary by state. In New York: These policies provide disability insurance only. They do not provide basic hospital, basic medical, or major medical insurance as defined by the New York State Insurance Department. For policy form 18ID, the expected benefit ratio is 50%. For policy forms 18UD, 18GI, 18UD-F, an 18GI-F, the expected benefit ratio is 60%. The expected benefit ratio is the portion of future premiums that the company expects to return as benefits when averaged over all people with these policy forms.