What Happens When I Get Declined for Disability Insurance?

Jamie Articles

Disability insurance can be the most difficult type of insurance to acquire. This is directly related to the fact that there is a 1 in 3 chance that people will be come disabled and can’t work at some point in their career. Furthermore, disability insurance policies require you go through the underwriting process once and not at a later time. As a result, underwriting standards can be tough.

According to LIMRA, only 60% of policies submitted to underwriting are approved as applied. The other 40% are either declined, rated or come back with some type of exclusion.

Common exclusions include:

  • Mental nervous limitation/exclusions–exclusions for addiction or psychological illnesses.
  • Back exclusions
  • Neck exclusions
  • Knee exclusions
  • Shoulder exclusions
  • Pregnancy exclusions
  • Asthma exclusions

An exclusion is different than a decline. An exclusion means that they will offer a policy but will not cover that specific pre-existing condition.  Sometimes the company will let you know when they will reconsider the exclusion. For example, if you apply while pregnant, they will likely add a pregnancy exclusion on the policy and you can request to remove the exclusion after you deliver your baby and return to work.

Another option the company has is to come back with a modified offer. These modifications can include:

  • Reduced benefit period such as 5 years or 10 years.
  • Additional premium such as 25% or 50%.
  • Combination of both

If your condition is more severe or the company deems it a high risk, they may fully decline an offer. This means they are not willing to offer you a policy.

If you have been declined for a policy, here are your options:

  • Try to sign up for your benefits through your employer. Employer policies are available for all employees and they cannot turn you down due to a pre-existing condition.
  • Contest. Sometimes there is confusion and the underwriter did not understand your condition completely. Or, there may be something you are unaware of in your medical records. I recently had an applicant get an exclusion for hearing. She had joked with her doctor that her husband thinks she need her ears checked since she doesn’t listen! We requested a letter of clarification from her doctor and resolved the issue.
  • Look for another company. Some companies specialize in higher risk situations and they may be able to offer a policy for you.

For more information about disability insurance, to request a quote, or what do do if you have been declined, contact Set for Life Insurance today!

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