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Disability insurance & pre-existing conditions, explained

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5 mins

You buy disability insurance in case you get sick or injured and can’t work. But what if you’re sick or injured when you apply for coverage? Will you be able to get disability insurance? How difficult will it be to collect benefits if you file a disability claim?

In most cases, yes, you can qualify for disability insurance with a pre-existing condition. And as long as your disability claim doesn’t relate to your pre-existing condition, you should be able to collect insurance benefits.

Here is what you need to know about getting disability insurance with a pre-existing condition.

What is a pre-existing condition?

A pre-existing condition is a medical condition you were diagnosed with or have encountered symptoms of prior to applying for coverage. Typically, insurers will only consider permanent ailments as pre-existing conditions.

How insurance companies assess a pre-existing condition will depend on its severity and how long you’ve had the condition. The company’s underwriter will review your medical records. They will assess how the condition is treated, how often it requires medical treatment, and any prescriptions you take.

Perhaps surprisingly, you’re more likely to receive coverage for a condition you’ve had for several years and that is being adequately managed than for one you were recently diagnosed with. A recently diagnosed condition is considered more of a risk than one you’ve successfully treated.

Serious, chronic conditions are more likely to disqualify you from coverage

Disability insurers will still offer you coverage if your pre-existing condition is manageable. The insurer’s decision will largely depend on how serious your condition is.

The most common conditions that prevent an application from obtaining coverage are chronic conditions, such as:

  • Renal disorders
  • Blood disorders
  • Cancer
  • Hepatitis
  • Arthritis
  • Multiple Sclerosis
  • Parkinson’s

In some cases, chronic fatigue can also cause application denial because it may signify a serious pre-existing condition that can lead to a disability claim later.

Some insurers, however, may accept an applicant with cancer if the disease has been in remission for a set number of years. Those with diabetes, lupus, certain mental disorders, sleep apnea, ulcerative colitis, and other disorders can typically obtain disability insurance provided that the condition is being treated.

Keep in mind that if you get disability insurance with a pre-existing condition you may pay a higher premium.

Your pre-existing condition may limit your benefits or be excluded from your coverage

If you have a pre-existing condition, it’s likely that your disability insurance policy will include an exclusion or limitation related to that condition.

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.

If you are granted disability insurance coverage with an exclusion, the insurance company will insure you but will add language to your policy that they will not cover certain body parts, conditions, or disabilities resulting from certain activities.

An exclusion for a pre-existing condition means you will be denied benefits if you have an injury or illness related to that condition. For example, if a diabetic suffers kidney failure because of the condition and has to miss work, the insurance company will likely refuse to pay benefits. A worker who had arthritis before applying for insurance can’t collect disability benefits later if the condition limits their ability to work.

If you need to file a claim on a policy with an exclusion, make sure you document and have your physician note the exact cause of your disability. Otherwise, the insurer may determine your injury or illness is related to your pre-existing condition and deny the claim.

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.

The insurance company’s 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.

Research multiple disability insurance companies if you have a pre-existing condition

Underwriting standards vary by insurance company. One insurance company may deny coverage for a certain pre-existing condition, while another company may offer coverage with an exclusion.

A good way to find a favorable offer is to work with an independent disability insurance agent. Independent agents work with multiple carriers and can find one that will accept your condition.

If available, group disability insurance is a viable option

If you have a pre-existing condition, you may benefit from a group disability insurance plan as your main coverage or supplement your individual disability policy.

In a group plan, the members of a particular group or organization are all offered the opportunity to receive disability insurance coverage. The coverage benefits and premium costs are generally the same for all members. The most common group plans are those offered by employers.

Group plans are guaranteed issue policies. If you apply for coverage, you are automatically enrolled. There is no underwriting, which means the insurance company will not ask about or penalize policyholders for pre-existing conditions.

Participating in a group plan is typically cheaper than buying an individual policy. This is especially true if the group sponsor, such as your employer, pays some or all of the policy cost.

The downsides to group disability insurance include:

  • Group plans offer Fewer coverage options than what you can receive on an individual policy.
  • Group plans don’t cover all types of disabilities.
  • Group plans are contingent on your employment or membership with the plan sponsor.

The information and content provided herein is for educational purposes only, and should not be considered legal, tax, investment, or financial advice, recommendation, or endorsement. Breeze does not guarantee the accuracy, completeness, reliability or usefulness of any testimonials, opinions, advice, product or service offers, or other information provided here by third parties. Individuals are encouraged to seek advice from their own tax or legal counsel.

— Published January 4, 2020
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