Protecting your lifestyle starts with protecting your income. Disability insurance provides a solid foundation for your financial future by providing you income when you’re unable to work due to an illness or injury. When most people hear the word “disability,” they immediately think of accidents. But the reality is that 90 percent of disabilities are actually caused by illnesses.

Disability insurance is more complex than other types of insurance. We recommend requesting quotes from an independent broker, who will be able to shop the top insurance carriers for you and provide an unbiased analysis.

What is underwriting?

Underwriting is the process an insurance company uses to determine the final approval terms and conditions. After you choose the right disability insurance policy, you will need to go through the underwriting process for an approval. After submitting an application, it takes 3 to 6 weeks to receive an offer. However, that period could be shorter or longer, depending on how long it takes to receive and underwrite (review) the required medical, financial, and occupational information.

Requirements for the applicant

Financial underwriting: documentation requirements

Just as financial institutions require income verification for mortgages, loans, etc., the insurance company will require income verification in the form of a paystub, W-2, and/or tax return. This will be required in order to determine if you are financially eligible for the coverage amount you are applying for. Your independent broker will be able to determine how much you would qualify for while initially discussing the plans they had quoted you.

Medical underwriting: phone interview and lab testing

The first step of medical underwriting would be to complete a phone interview. During this interview, you will be asked medical information in order for the insurance carrier to fully assess your medical history.

In most cases, blood and urine samples will also be required (waived for residents & fellows). The insurance company will pay for the entire cost of the exam. If there are any health issues, coverage may still be offered, but with modified benefits, a particular condition excluded from coverage, an extra premium may be charged because of adverse health history, or it may not affect the offer at all.

Special underwriting consideration programs

Most insurance companies have Special Limits & Streamlined Underwriting for New Professionals. These programs will make the underwriting process simpler for medical & dental students, residents, fellows, and first-year attending physicians.

Students, residents, fellows, and first-year professionals often lack the earnings history necessary to qualify for disability income insurance, yet have tremendous future earnings potential. Through the programs, you could be underwritten without proof of income and without lab testing.

Underwriting review

The underwriting review will consist of the following.

Pharmacy report. This report is a database that collects the history of your pharmacy prescriptions. Any insurance company can request this information and still get a sense of what medical conditions you have even if they do not require a medical exam or medical records.

Medical records (attending physician statement). The underwriters may request medical records from any of your physicians to get a better understanding of your medical history, symptoms, and treatment.

Motor vehicle record. An insurance company considers the information in MVRs to assess your risk profile. The insurer may analyze your violations, suspended license, DUI’s, reckless driving, at-fault accidents, etc.

MIB, medical information bureau. The MIB is exclusively used by insurers to assess your medical risk and eligibility for insurance. This database is sometimes described as an “information exchange” because insurance carriers contribute their underwriting medical information about applicants, which can be used by other insurers who later search the database.

Avocations. Some extracurricular activities are deemed risky by insurance carriers. They include, but are not limited to: skydiving, motor-vehicle racing, scuba diving, rock climbing, and mountaineering. Depending on the frequency and degree of participation, the underwriters may exclude your activity from the policy.

Occupational considerations. In order to qualify for long-term disability insurance, you will need to be working without limitations and for a minimum number of hours (typically 30 hours) per week. The principal would offer coverage to anyone working at least 20 hours on average per week.

International considerations. Green card holders are eligible for the same unrestricted coverage as a U.S. Citizen. Foreign nationals who currently hold an H1B, L1, J1, O1, or TN temporary visas will be considered for disability coverage on a case-by-case basis.

Approval for disability insurance

One of the last steps of the underwriting process is the approval and offer. When you buy disability insurance, it is important to understand that the policy you purchase could have limitations once the underwriter has reviewed your medical history.

Exclusions

Any medications you take or have taken in the past, surgeries, diagnosed conditions have to be reviewed to determine if they would lead to a greater risk that you will be disabled in the future vs. someone without the same history. Disability underwriters look to use specific exclusions prior to adding additional premium or cutting back benefits. For example, if you have a herniated disk in your lower back, you could expect the company to put a back exclusion on the policy. The Top 5 insurance carriers (Principal, Ameritas, Guardian, Standard, and MassMutual) will further limit this exclusion to just the Lumbar (lower back), so a disability due to your Thoracic or Cervical spine would be fully covered.

Mental nervous exclusions

While back exclusions are very common, the one that is most frequently used is the mental and nervous exclusion. If you have a history of anxiety, depression, or attention deficit disorder you can expect to have this exclusion added to your policy. Since it is so common, a high percentage of disability policies are issued with some form of exclusion or limitation.

While the two exclusions above are the most common, there are many conditions that could result in an exclusion … ears or eyes for degenerative type conditions, knees or hips for joint conditions or prior surgeries, digestive track for problems like colitis, etc. Someone’s weight or blood pressure can also lead to multiple health problems.

Bob Bhayani is managing partner, Dr.DisabilityQuotes.com.

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