I get asked frequently how certain pre-existing medical conditions will be handled by the underwriter of a disability insurance company. If you have a pre-existing medical condition, it may affect the outcome of your application. How it affects your policy depends on the severity of your medical history and the likelihood that that condition will lead to a long-term disability claim under the policy being sold. Disability insurance companies have a few options for handling applicants with pre-existing medical histories.

• Approve The Policy As Applied
   
• Approve The Policy with Reduced Coverage
   
• Approve The Policy with an Exclusion Rider
   
• Approve the Policy charging an Extra Rating
   
• Decline the Application Altogether
   

Approve The Policy As Applied

Everybody has a medical history to some degree; the company would be more afraid of someone who answered 'no' to every medical question on an application than of someone who provides details about their medical history. The majority of applications this company receives are approved. Normal illnesses like the flu are generally not going to cause you to become disabled in the future.

People also tend to buy disability insurance in their early 30s, when they start a family, and those in their 30s are much healthier than those in their 40s and 50s. You are never going to be healthier than you are today, so buying disability insurance at a younger age will make it more likely your policy is approved as applied for, and will also save you money on the cost over your lifetime.

Approval with Reduced Coverage

Depending on the pre-existing condition, the underwriter evaluating your application may choose to reduce benefits, such as the benefit period. You may have wanted a policy with a benefit period to age 65 to protect you during your working years, but certain medical histories may result in a limited benefit period. The company's liability under a policy that pays benefits to age 65 is significantly larger than under a policy that pays benefits for 2, 5, or 10 years.

The company may also be unwilling to offer certain optional riders, such as the future increase option or the automatic benefit increase. Riders that result in additional coverage in the future are usually the first options to be dropped by an underwriter.

Approval with an Exclusion Rider

The Medical Exclusion Rider becomes necessary when;

• The insurance company has identified medical history that increases the likelihood that you will make a disability claim at some point in the future.
   
• You have a specific medical problem with clearly identifiable symptoms, such as organ, joint, or musculoskeletal disorders.
   
• An impairment is severe, recent, very specific, or likely to recur.
   
• The risk can be clearly defined and easily excluded.

A medical exclusion rider does not change the policy's price. While nobody wants to have an exclusion on their policy, it is the only way a company can offer you a policy if you have a condition that could lead to a claim. There is an almost unlimited amount of illnesses and accidents that could disable you, in order for companies to be able to protect you for all of the rest of them they have to exclude conditions that you have a history of already. If it were not for exclusions, disability insurance would not exist at all because it would be impossible to make a profit.

Many Exclusions Have Review Periods

Some exclusion riders will be permanent parts of your policy, but many will have a review period. A review period is usually 2 or 3 years, and after it is completed, you can apply to have an exclusion removed from your policy. If an exclusion is reviewable, the company wants to see that the issue has been resolved and that no further treatment or medications have been taken for it before they will consider removing it.

Approvals with Extra Ratings

The insurance company can simply charge you more for the benefits than the normal published rates. If you are overweight or have a history of high blood pressure or high cholesterol, the underwriter usually applies an extra rating.

Like exclusions, these are also reviewable. If you had a policy with an extra rating because of your weight, if you lost the necessary weight to be reconsidered for a period of time, the company could review the file to see if they can remove the rating.

Usually, an extra rating is accompanied by shorter benefit periods and other restrictions on optional riders.

A Declination of Coverage

Unfortunately, we cannot offer coverage to everybody, and there are some medical histories and pre-existing conditions that are just too likely to cause a claim for an insurance company to make an offer. As an example, I am a Type 1 diabetic, and I can no longer get a policy issued as a result. The toughest part of our job is fielding all of the phone calls from people who just found out they have cancer, diabetes, or any other illness that is likely to cause a long-term disability. We then have to tell them the bad news that it is too late to buy a policy with us. There are graded risk disability policies on the marketplace, but that is not a product that we offer on this website.

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.