Disability insurance policies provide meaningful coverage, but your policy will not cover every single case of disability. When you apply for a policy, there may be specific limitations or exclusions. Insurance carriers do this to reduce risk. This will protect them from paying a claim from injury or illness due to high-risk conditions or activities.

Underwriting

As part of your application process, the insurance company will have you complete an application, phone interview, and medical exam. You’ll answer personal and lifestyle questions and give details about your medical history. It most likely will include a blood and urine sample and a collection of height, weight, blood pressure and pulse. The insurance company’s underwriter will review the results from your phone interview, exam, and medical records.

What’s Not Covered?

After the underwriter has reviewed your results, you may be offered full coverage or coverage with an exclusion or limitation. If you are offered disability coverage with an exclusion, the insurance company will insure you, but the they will not cover certain conditions, body parts, or disabilities resulting from certain activities.

There are some exclusions that apply to all policyholders. Insurers typically do not pay claims for injury or illness resulting from:

  • Self-inflicted acts
  • Criminal activities
  • Acts of war
  • Civil disobedience or rebellion
  • Operating a motor vehicle while under the influence

You might have additional exclusions that are specific to you such as your current health, occupation, and certain activities you perform. For instance, if skydiving is a hobby of yours, your policy may not provide coverage if an injury occurs from skydiving.

Another common exclusion or limitation is travel. Some insurers allow you to live outside the U.S. and still collect full benefits, while others may limit payments to those outside of the U.S.

Some insurers also exclude mental and nervous disabilities like depression, post-traumatic stress disorder, and substance abuse. Some may cover these conditions the same as they would for accidents and illnesses. Others may limit them to a period of time, typically a maximum of 24 months.

If mental health is a concern, make sure you know how your policy will pay benefits.

In some cases, an underwriter may limit your coverage. They may limit your benefit period to 10 years instead of until age 65 due to a pre-existing health condition. Some policies may limit your ability to purchase more coverage later without additional underwriting.

The Bottom Line

Disability insurance is valuable, but when you’re buying a policy be sure to know the policy’s limitations and exclusions.

Many exclusions will be permanent in your insurance contract, but others may be reviewable after a certain period of time. For instance, if you can prove to the insurance company that you have a condition (that was excluded) under control for a certain period of time, they might remove it from the contract.

When you work with an independent disability insurance agent, we can answer your questions, design a meaningful policy, and guide you through the process.