When you apply for physician disability insurance, you may receive an offer of coverage with specific limitations or exclusions.
Exclusions and limitations are added by the insurance carrier to mitigate their risk of paying a claim for an illness or injury resulting from high-risk conditions or activities.
During the application process, the insurer will schedule a paramedical exam. This will consist of an interview to gather medical history, as well as collection of blood and urine and recording of height, weight, blood pressure and pulse. The results of the exam plus your medical records will be sent to the insurance company’s underwriter.
You will also be asked several lifestyle questions to further assess your risk of filing a claim for disability coverage. For example, the insurance company may want to know upfront if you participate in high-risk activities such as rock climbing or skydiving.
If you are granted disability insurance coverage with an exclusion, the insurance company will still insure you. But the insurer will add language to your policy that they will not cover certain body parts, conditions, or disabilities resulting from certain activities.
Many exclusions apply to all applicants. For example, disability insurers typically will not pay claims for injury or illness resulting from:
- Self-inflicted acts
- Criminal activities
- Acts of war
- Civil disobedience or rebellion
- Operating a motor vehicle while intoxicated
You may also have additional exclusions that are specific to your underwriting that restrict coverage for claims resulting from or related to a preexisting medical condition, or from participation in a potentially hazardous activity that presents an increased risk of potential disability.
For example, if you have had a herniated disc, your policy may exclude any disability claims resulting from spinal injuries. The same goes if you suffer from, say, asthma. If you’re an avid rock climber, the insurance company may stipulate that it will not pay you benefits if you become disabled while participating in that activity.
While many exclusions will be written into your insurance contract as permanent, others may be reviewable after a certain period of time. For example, if you can show the insurer that you have a condition under control for a period of time, they may remove that exclusion.
Also keep in mind that an exclusion doesn’t always result in lost benefits. For example, if you have an exclusion for a pre-existing spine condition but suffered a disabling injury due to a traumatic car accident, the insurer may conclude that the accident, not the pre-existing condition, led to your inability to work. Also, if you suffer two disabling conditions where only one is excluded from coverage, you may qualify for benefits. Even if you have an exclusion, you should always file a claim if you become disabled.
Your disability insurance policy may also include certain limitations. These are similar to exclusions except that instead of completing restricting coverage for certain conditions, the policy may limit your benefits in certain circumstances. Like exclusions, some insurance company limitations are universal, while others may be added to a specific policy based on the applicant’s underwriting.
One of the more common limitations is disabilities that are caused by mental illness or anxiety. Many policies that pay disability benefits for 10 years or to age 65 may limit the benefit period for mental illness to 12 months or two years.
The underwriter may also consider some of your underwriting conditions risky enough to limit coverage. For example, the company may limit your benefits period to 10 years because of a pre-existing health condition, even if you applied for benefits to age 65. Some policies may also limit your ability to purchase additional coverage in later years without going through the underwriting process.
The presence of exclusions and limitations is an important reason why you need to get disability insurance quotes from multiple insurance companies, and not just compare price and features.
Each company has its own system for underwriting. Whereas one company may exclude a pre-existing condition or an activity, another may grant you full coverage in spite of those factors. A few companies also have no limitations on benefits for disabilities arising from mental disorders.
It’s also why you should opt for an independent insurance agent who represents multiple carriers and can therefore provide several options, as opposed to a captive agent who will only sell you a policy of the company he or she works for.
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Colin is the Founder & CEO of LeverageRx, an online lending and insurance marketplace for doctors. Colin has over 10 years of experience in financial services and is a licensed life and health insurance agent.