You have been approved for a disability policy, but the insurance company is excluding a preexisting condition from coverage. Why do insurance companies exclude a known condition from the policy?

The reasoning is very simple – without excluding that condition, because of the increased risk of a future disability, the insurance company would probably not be able to issue you a policy.

Any insurance policy is meant to protect you from unknown risks and is priced accordingly. Ask Southern California homeowners who live near known fire zones. They pay considerably more for their homeowner’s insurance than those living at a distance from those fires. Many are at risk of losing their coverage.

In the case of disability insurance, if you have a known condition that presents a high risk of a future disability, the premiums the insurance company would have to charge would be prohibitive and, therefore, most people would not be able to pay the premium required to insure that condition. By eliminating the condition from the coverage, the policy will be more affordable.

Knowing there are many potential causes of disability, those who accept a policy with an exclusion for a preexisting condition are rightfully covering the majority of risks of becoming disabled in the future.