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 your history to make sure you did not have a good or bad year financially. Business owners should report net income after expenses, not gross income.
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 the amount of coverage they qualify for.
High net worth and bankruptcy can affect an applicant’s ability to obtain a policy. Generally, if an applicant has a net worth of $10,000,000 or more, their need for disability insurance is less significant, and some major carriers will not issue a policy.
To be approved for a policy like the Provider Choice, you will need to be in relatively good health. The disability insurance application contains many questions about pre-existing conditions and medical history. It is very important to answer these questions in detail and honestly.
The companies will review your medical records whenever they deem necessary. They will be able to see all the prescriptions you have filled, so providing them with detailed information about every medical issue you have had will make them feel more comfortable 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 about your health; instead, the insurance company representative will call you to ask these detailed questions.
The results of the medical underwriting portion of the application often determine whether an applicant can get a policy and what that policy will look like. Oftentimes, 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 coverage offer and a policy that performs 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.
Individual disability insurance policy Forms 18ID, 18UD, and 18GI are 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 only disability insurance. 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, and 18GI-F, the expected benefit ratio is 60%. The expected benefit ratio is the portion of future premiums the company expects to return as benefits, averaged across all people with these policy forms.
