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 of that condition to lead to a long-term disability claim on 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 All Together
Everybody has a medical history to a certain degree, the company would be more afraid of somebody who answered no to every medical question on an application than of somebody who provides details to their medical history. The majority of applications this company receives do get approved as applied. 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 the most in their early 30s when they start a family, and people in their 30s tend to be much healthier than people 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.
Depending on the pre-existing condition the underwriter evaluating your application could choose to reduce things like 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 liability for the company on a policy paying benefits to age 65 is significantly larger than a policy that only pays benefits for 2, 5, or 10 years.
The company may also not be willing to offer certain optional riders like 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.