Printed with permission from About Disability Insurance
Long or short term disability insurance underwriting has been
known to upset many people who apply for long or short term disability insurance. People
go into the process with unrealistic expectations, this is a result
of agents not properly preparing their clients for what to expect during
the disability insurance underwriting process. My goal here is to let
people know what they can expect during the disability insurance underwriting
process.
One important thought should be in the
head of everybody who applies for long or short term disability insurance, do not
expect to receive an issued policy exactly as applied for yourself. A DI
underwriter can reduce the amount of coverage applied for, place exclusion
riders on the policy, increase the rate, decrease the benefit period,
offer an entirely different policy series than the one applied for,
or decline the coverage outright. As a consumer you need to understand
that very few contracts get issued exactly as applied for. Let's dive
into the process step by step.
Do not simply sign a long or short term disability application and
expect the agent to fill it out correctly for you, this could do a
lot of damage to your MIB file, and scar your insurability for life.
It is important to answer all questions in detail, and leave nothing
to question. As a consumer you have several goals here; to obtain
the highest occupational class possible, eliminate the need for follow-up
questions during underwriting, and eliminate the need for physicians
medical records during underwriting.
There is a section of a long or short term disability insurance application devoted to describing
your occupation, try to put yourself in the best possible light for
the underwriter. The higher the occupational class he gives you, the
lower your rate will be. As an example, one may be tempted to describe
your occupation as computer consultant. This is a class 4 with one
insurance company, but computer engineer or analyst is a class 5,
and hence a higher rate. Some occupations are straight forward, but
if your occupation is somewhat vague, or open for interpretation give
the underwriter a full and complete picture of what you are doing.
Include a breakdown of your time including travel, client meetings,
etc.
Another section of the application has to do with financial history,
most insurance carriers will want to know your current earnings structure,
and what you earned for the past two years. This will always have
to be supported with financial documentation in the form of a W-2,
tax return, or paystub. A hard and fast rule of disability insurance
underwriting is you will always get an offer based on exactly what
you verify through financial documentation. If you are making $150,000
this year, made $100,000 last year, and can only show the $100,000
via financial documentation only expect to get an offer based on the
100K. There really is no way around this, only expect coverage based
on what you can prove.
The third major section of the application
causes most of the problems, and this is your medical history. Understand
that life insurance policies are much easier to underwrite, the underwriter
only needs to see if you have a life threatening pre-existing condition.
A DI underwriter has to deal with the millions of possible conditions
that could disable you. The most common disability insurance underwriting
problems are spinal, mental and nervous, or labwork related. To come
out of underwriting at all is a success with an issued policy, to
come out of underwriting with one or two pre-existing condition riders
is a great job, and to come out with coverage exactly as applied for
is a miracle. There are just so many ways to receive a rider, reduced
benefit, or some other policy modification that to expect a perfect
policy is unrealistic. Disability insurance applications take into
account your medical history for the past ten years, the more details
you provide the underwriter up front, the less discovery the underwriter
will have to do, and the more comfortable the underwriter will feel
issuing your coverage. It is vital that you list every physician you
have seen for the past ten years, their locations, and exactly what
the visit regarded. The goal of disability insurance underwriting
is to put the warm and fuzzy feelings into the underwriter handling
your case, so take all the guess work out of it.
Long or short term disability insurance underwriting is quite a simple process when you
break it down to the basic components.
Fill out the application in detail
Provide detailed financial verification of your income
Complete your labwork quickly
Keep a realistic goal for the result
