Applying for Disability Insurance

While it’s not terribly difficult to apply for disability insurance, there are some hoops to be jumped through.
To get disability insurance an individual needs to fill out and submit an application form and deal with a few other details that an insurance agent will outline. Once that application is completed, it’s sent to the insurance company who gives it the fine tooth comb treatment and then makes a formal decision on whether or not to offer disability insurance. Again, while this isn’t the same thing as applying for life insurance, it is a good idea to have realistic expectations about pricing, potential exclusions and the timing of the policy ultimately offered for consideration.

One of the first things to remember when applying for disability insurance is that a quote is just that, a quote. It is not guaranteed. It boils down to being a guess and projection about what your agent feels you will be offered. In order to fine tune a quote and to have it be more realistic according to the circumstances of a person’s life, there needs to be discussions about an individual’s medical history, personal history, income and occupation.

Once the agent knows these details, there is going to be a more accurate quote. Generally speaking, expect a quote in the range of 1% to 4% of yearly income. Don’t be surprised if the occupation stated involves things like skydiving, to have the insurance company express a certain amount of reluctance to offer a policy.

After getting several quotes, a person needs to decide which insurance company to work with and then hand in all the rest of the required material: the application, a personal history interview, insurance medical exam and tax forms from two years previously. The only item that is not required is the personal history interview, but this does give the underwriter a much better overall picture of the person they are considering for disability issue.

Underwriting normally takes about 4 to 8 weeks, rarely 4 weeks unless the application is totally perfect in all ways and the applicant is in prime physical health, something that doesn’t happen all that often. To shorten the underwriting process, provide all the information requested and then add more. Usually though the hang up is getting medical records from the family physician.

The medical portion of underwriting is the most critical. Perfect health means you’re good to go and don’t have a medical condition and haven’t been seen by a doctor. Understandably, this is pretty rare, and those with medical conditions need to know about price rating and exclusions when it comes to disability insurance.

Price ratings come into play when the company is offering coverage to an applicant who is considered to be a higher risk than average, e.g. someone morbidly obese. Exclusions are amendments that come with the policy and spell out that a specific condition or even body part is not covered under the policy. Put another way, those with existing medical conditions being treated should expect exclusions for those conditions. The exclusions tend not to affect pricing, but to be sure, talk to an experienced insurance agent to get all of the right answers in a timely, no hassle manner.

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Sunday, December 13th, 2009 Press