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Disability insurance is one of the most difficult types of insurance policies to obtain. Since it has a higher risk of claims, companies are very particular about whom they will underwrite and what types of risks they are willing to take. Approximately one in three applications will be denied or have some sort of exclusion rider put on the policy.
The underwriting process can take anywhere from 2 to 6 weeks. Oftentimes the delay is due to medical records requested from your doctor or other requests that have not been fulfilled. (Example: not obtaining financial documentation). It is important for you to be involved to help the process go smoothly. We will do our best to communicate with you the status of your application.
There is no obligation to accept the coverage until the policy comes back to your satisfaction. You may make any changes during the application process or when the policy comes back from the insurance company. (Example: You didn't want a particular rider. You can have the company remove it before they issue the policy.)
When you apply, you have two choices regarding the start of coverage:
- You may submit the application on a COD (Cash on Delivery) basis. No coverage is in force until you receive the issued policy and pay the first premium.
- You can send in the application with two month's premium. If a disability occurs during the process, the company must pay your claim (assuming you have no pre-existing conditions and they were going to offer coverage). If you take this option and everything goes smoothly, the company will apply the premium toward the first two months. If your application is denied or you decline taking the coverage, the premium is 100 percent reimbursable.
Before you apply, you should realize that the information you disclose on your application or during the phone interview will stay in the MIB (Medical Information Bureau) for seven years. We can initially asses your situation based on our experience and let you know if you ought to wait to apply or not. If you are considered high risk, we may be able to find coverage with a different company.
Some of the conditions that cause applications to be denied are:
- If you are currently pregnant. You must wait until you have given birth and are back to work.
- If you have a history of depression or mental nervous disorder, the companies like to see you treatment-free for a period of time.
- If you are currently taking anti-depressants.
- You are currently seeking treatment for something unknown. The company would prefer to have a definitive diagnosis.
- Drug or alcohol abuse
Traveling to a dangerous part of the world (e.g. Middle East)
Sometimes the company is willing to offer a policy with an exclusion rider. Here are some common exclusions:
- Knees
- Back
- Neck
- Rock-climbing
- Scuba diving
- Migraine Headaches
- Asthma
- Hands or fingers
- Eyes
We will review your application with you. If the application appears to be free of problems, we will proceed with the process:
- Someone from a paramedical company will contact you to schedule your paramedical exam. This usually consists of a blood and urine test. The exam checks for cholesterol, nicotine, AIDS, drugs, and liver enzymes to name a few. You may request a copy of the results to be sent to your home.
- Someone from the insurance company's home office may contact you to conduct a phone interview with you.
- If you have seen a doctor in recent years, the company will send an APS (Attending Physician Statement) to your doctor for more information. This is the part of the process that takes the longest. Sometimes, we recommend calling your physician and letting them know you applied for insurance and that the company requested a statement.
- The company will review all of the information and make a decision. If an offer is made, the company will issue the policy.
- We will mail you the policy with instructions for your review and delivery.
- KF Financial will provide continuing support over the years, and assist you with any changes in your situation and with any claims.
Here's a complete list of what you need to complete to finish the disability insurance underwriting process.
- Fill out the application completely with details. Be as comprehensive as possible. If you have a question, please bring it to our attention and we can assist you.
- Send in either last year's tax return with schedules, a copy of your pay stub, a copy of your employment contract stating your income, or a letter from your employer. Note: This requirement is waived for certain occupations that automatically qualify for certain benefit amounts. See How Much Coverage.
- Complete the phone interview with the insurance company's home office.
- Complete the paramedical exam. (We pay for this.)
Behind the scenes, KF Financial will be working with your assigned underwriter to negotiate the best offer from the insurance company. Long-term disability income insurance can be difficult to qualify for. It is important to have somebody with the knowledge and experience we offer as your advocate during the underwriting process.
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