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.