We get quite a few calls in our office from pregnant women looking to purchase disability insurance.  Unfortunately, many insurance companies will not write a new policy for a pregnant woman.  If they do offer coverage, they will exclude the current pregnancy as a preexisting condition.  Future pregnancies could then be covered (provided there is no history of pregnancy complications).

As there are many causes of disability, we often advise to purchase a good quality disability policy with the pregnancy exclusion and then ask the company to add pregnancy back into the policy after the birth.

Insurance companies do not view maternity leave as a disability.  If you are lucky enough to have a policy before you become pregnant, the policy will typically only pay benefits for complications due to pregnancy which prevent one from performing the duties of one’s occupation. Also, as the elimination period (or waiting period) is typically 90 days or longer, a long term disability policy would not be appropriate for your maternity leave needs.

We often advise as to the cost of waiting to purchase disability insurance and this is a great example of this.  The best time to purchase a disability policy is now.

Personal disability insurance is designed to replace a portion of your income in the event of an injury or illness.  If you are a business owner (including professional practice owners), there are several disability insurance policies designed to protect your business in the event of a disability.  I will cover one of those policies in this post and continue with other types of policies in subsequent postings.

If you were to become disabled, you probably wouldn’t be available to provide the essential services your customers/clients expect.  You also probably wouldn’t be there to provide the leadership and direction your employees need.  The revenue of the business/practice would most probably decline, but the expenses necessary to keeping the doors open would probably stay the same.

Business Overhead Expense (BOE) is designed to cover your overhead expenses and keep the business running so you would have a viable business to return to.  Without this coverage, you might be forced to consider laying off employees, borrowing money to keep the business alive or, worst case scenario, closing your business.

Overhead Expense Disability insurance can help you keep the business alive by paying ongoing expenses such as rent, utilities and taxes.  It can help pay the salary and benefits of your employees, as well as a portion of the salary of your temporary replacement.  It can also make payments to your existing loans.

The bottom line is a disability does not have to cause the cessation of a business/practice you spent so long to build.  By preserving your business with Overhead Expense Disability insurance, you will help preserve the continuity of your business, while retaining your customers.

I went to my physician for my annual check-up recently and, as part of the physical, he wanted to review a full blood test I had done as a prerequisite to my exam.  As I was late for a business appointment, I told him I would take the results home and review them myself.  He told me it would be best if he reviewed them with me, as I might not understand the significance of all the results and he would probably want to give me some advice based on the results.  My other appointment was waiting, so I left with the print-out from the lab.

When I got home that night, I sat down to digest the lab results.  While I did understand cholesterol and white blood cell count, most of the tests might as well have been written in Greek, as I had no idea what I was looking at.  After several hours attempting to decipher the information, I broke down and decided to call my doctor the next day to review the results with him.

While this never really happened to me, I’m sure, in this fast-moving world, there are a few of you to whom this story sounds familiar.  I experience a  similar scenario daily with people (professionals, mostly) who take disability insurance quotes I provide for them home to digest, without taking advantage of my knowledge and expertise.  While not quite as technical as a lab report, there are terms and provisions in every disability insurance policy that sound similar, but actually perform quite differently at the time of claim.

If you are working with an advisor who is well-versed in disability insurance, take advantage of his/her expertise.  Learn the terms and provisions so you can choose the right policy for your situation.  It might not be life and death as in my story about the blood test, but it can make a difference in whether you are adequately insured in the event of a disability.

Your disability policy has been approved but your lower back is excluded from coverage.  Not fair, you say?  That’s certainly a viewpoint I hear a lot.  Here’s how I look at it – the insurance company, by carving out a condition that presents a high risk to the company is able to make you an offer and issue a policy. The alternative would be to not issue the policy.

The wording of exclusions is typically fairly general (e.g. lower back, as mentioned above) and is often an area of concern for policyholders.  While the concern is understandable, it’s important to understand why the exclusion is worded so generally and how the insurance companies adjudicate claims having to do with the exclusion.

Exclusions, like other policy language, have to be filed with each state’s insurance commission.  If each possible exclusion was included, the list would be far too long.  Therefore, “lower back” can include all the discs in the area, surrounding muscles and tendons, etc.

When evaluating a claim for benefits, an insurance company will determine if the medical concerns that necessitated the exclusion have any effect on the claim.  Specifically, they will determine if the preexisting condition is a contributor to the current disability.  For instance, a recent car accident would be looked at as the reason for the disability, even if there were lower back problems previously.  If preexisting history is, in fact, a contributor to the current disability, benefit would not be paid.

There are many causes of disability and, even with one exclusion, disability insurance, should be an important component of any financial plan.