So, you’ve just been approved for life insurance at the insurance carrier’s best health class. It would seem reasonable to expect similar treatment on your disability insurance application, right? I wish it were that simple. There are so many differences in the underwriting processes that I have to make sure I adjust the expectations of my life insurance clients who are applying for disability insurance.
These are some of the things I tell a client when we submit an application for disability insurance (especially when they have purchased life insurance):
- A disability insurance application almost always takes longer to underwrite than a life insurance application. If both life and disability insurance applications are submitted at the same time, the life application will most probably be approved sooner than the disability application.
- The maximum monthly benefit of a disability policy is directly tied to your income and the amount of individual and/or group disability coverage you already have. You may have been quoted based on an estimated annual income, but the final amount approved for you will be based on financial documentation submitted with the application.
- Many medical conditions, while not life-threatening, may be disabling or present a risk of disability. A bad back, for instance, probably wouldn’t affect life insurance underwriting, but in most cases would have an effect on disability underwriting.
- Life insurance underwriters assign health classes, thereby adjusting premium based on the risk presented. A disability insurance underwriter might request a higher premium, but more typically will exclude a preexisting condition (temporarily or permanently) and/or adjust some of the benefits (e.g. shorter benefit period, elimination of some riders, etc.).
Complete your application thoroughly, informing the insurance company of any medical conditions, etc. Your agent, upon reviewing your application, should have a pretty good feel as to how the insurance company will view your information and make any adjustments to your coverage. We are always conservative in our estimates so as to minimize disappointment when the underwriter makes those adjustments.