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More insights in “We’re In This Together” and “Understanding Underwriting”.

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We have discussed your personal situation in detail and we’re ready to complete your application for income protection.  Now what?

The disability insurance application is designed to collect lots of information to determine your eligibility based on risk factors.  My goal is to help you understand the following details of completing a disability insurance application and doing it right.  Details matter and this is where experience counts.

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AGE & GENDER: Your disability premium is based on your age and gender.  The younger you are, the less your premium.  Females pay more than males due to a higher frequency of disability claims and this is referred to as SEX-DISTINCT premium rates.  Fortunately, there are some situations, which we can discuss, where females can pay substantially lower premiums utilizing UNISEX premium rates.  UNISEX premium rates use the same premium for men and women creating real planning opportunities for females in some situations.

OCCUPATION / DUTIES: Your occupation plays an important role in determining what kind of income protection you can purchase and how much your premium will be.  Some doctors, dentists and a few other professionals may have a specialty occupation, which needs to be disclosed on the application as well as your specific job duties.  Statistically, certain occupations pose less risk to the insurance company.  For instance, if you are an architect, an engineer, or a CPA, you are less likely to file a disability claim than a hotel manager, maintenance worker, or mechanic.  The insurance companies group occupations together to assign a rating class based on how hazardous the occupation, the income level of individuals working in the occupation, and claims experience.  Note even though some occupation classes pose a greater risk, 90% of all disabilities are illness related, which doesn’t discriminate regardless of occupation class.

PERSONAL HABITS & LIFESTYLE: Personal habits and lifestyle questions are asked to determine increased risk for a potential disability.  The insurance company has access to a lot more information than you may suspect.  It can get information with your signed authorization from the MIB, databases, credit reporting agencies and other organizations.  It can even conduct interviews with business associates or professional advisors if needed.  Here are some examples…

Have you ever been declined for any type of disability, life or long-term care insurance, etc.?

Have you ever been arrested?

Use Marijuana or other Drugs.

Foreign travel out of the country, where and why?

Driving History – DMV records are checked. Driving injuries sustained in motor vehicle accidents account for a major portion of disability claims.

Avocations — Aviation, Scuba Diving, Sky Diving, Auto Racing, etc.,

If your personal habits or lifestyle seem questionable more details will be requested to shed light on the actual risk you pose to the company for disability insurance.


It’s a method of evaluating data relevant to earned income, unearned income, net worth, and any other components of compensation to determine the proper amount of monthly disability income insurance to issue the applicant and to avoid OVER INSURANCE.  

EARNED INCOME:  Based on your occupation and active employment, gross earned income, less business expenses, but before any other deductions as reported for federal income tax purposes is the primary basis for determining the amount of disability income the insurance company is willing to consider for an applicant.  The income risk you’re insuring is earned income not gross income.  

Income includes salaries, wages, fees, commissions, bonuses, business profits, or other payments for personal services. Pension and profit sharing contributions are also considered earned income.

NOTE:  Whenever income has increased substantially in the past year (i.e. 20% or more) an explanation must be provided.  Unusual fluctuations may require income to be averaged to determine the appropriate amount of monthly disability insurance benefits.


(PROFESSIONAL SELF-EMPLOYED)  $250,000 Gross Income Less $100,000 Business Expenses = $150,000 = $7,300 Monthly Disability Insurance

(EMPLOYEE W-2 EARNINGS)  $150,000 = $7,300 Monthly Disability Insurance

REQUIRED INCOME VERIFICATION:  The underwriter will require tax documents to confirm your income.

● Pay Stubs
● W2 earnings Statement
● Tax Returns (Possibly Two Years)

UNEARNED INCOME:  Unearned income is different than earned income because it comes to you whether you work or not and includes dividends, interest income, investment income, rental income, deferred compensation, or other amounts of money that comes to you.  The insurance company is concerned about large amounts of unearned income as a form of disability insurance and uses a formula to reduce a monthly disability benefit when someone has a large amount of unearned income usually around $30,000 to $35,000 a year.

NET WORTH:  Depending on the company, net worth over $6 million (not including personal residence) will usually result in a decline.  Applications will be considered on a case-by-case basis.   Special risk and high limit disability insurance may be an option to consider for high net worth individuals.

BANKRUPTCY:  Bankruptcy history presents a concern to the underwriter and may be a means of escaping a bad financial situation.  Until all creditors’ claims have been settled, regardless of circumstances, there is a risk the bankrupt individual may be tempted to use disability insurance income to compensate for lost income or one’s inability to earn a satisfactory income.

ISSUE LIMITS:  Each insurance company has a similar table that is used to determine how much monthly disability insurance you can receive based on your occupation class, taxable income including any current individual or group long-term disability coverage.  In general, the insurance company will try to replace 50 to 70 percent of your pretax earnings. This percentage may be higher if your income is low or less if your income is high.

Companies are very concerned about OVER INSURANCE to prevent against an incentive or motivation to become disabled.

PARTICIPATION LIMITS:  This is the total amount of disability coverage that will be allowed by a company from all companies factoring in your income and the current amount of individual or group disability insurance on your life.

OVER INSURANCE:  A situation where the total amount of disability insurance available to an individual from all sources exceeds the insurer’s issue limits.

OTHER DISABILITY COVERAGE:  An insurance company takes into consideration other types of individual or group disability insurance benefits you will be entitled to receive if disabled.  Your new policy is designed to supplement any other coverage currently in-force or will be eligible for during the processing of your application.  The company will limit the amount of coverage you can buy, based on the amount of disability coverage you already have.


MEDICAL HISTORY: Health is everything in underwriting disability insurance and is used to determine your eligibility.  The application is designed to ask detailed questions regarding current and past health conditions, which need to be disclosed on the application.  Questions about your family’s medical history to determine whether you are at high risk of developing certain medical conditions, such as diabetes, heart disease, cancer, etc., will also be asked of you.

MEDICAL TESTS: Medical tests may be required depending on your age and the amount of income protection applied for with the company. These mini examinations include blood, urine, height, weight, blood pressure and pulse readings.  Your medical tests are paid for by the insurance company with no cost to you.  They are scheduled by a third party vendor who will call to schedule a convenient time to provide these medical tests at either your home or office.  

I recommend an early morning examination when you’re relaxed.  The most accurate results are when the applicant has fasted the night before and not exercised prior.  Exercise and foods can elevate certain test numbers and alter your results. You have the right to request your test results once the underwriting of your application has been completed.

TELEPHONE INTERVIEW: Once your application has been submitted and received in the underwriting department.  You will be called for the required telephone interview to confirm all of the answers on your application as well as the details to medical questions.  IMPORTANT!  The answers you provide should not be any different or contradict the information disclosed on your application.    It should be consistent with no discrepancies between what the underwriter is reviewing on your application and the transcribed telephone interview.

NOTE: The company always reserves the right to ask for more detailed medical testing should it be requested by the underwriter.

MY COVER LETTER: DETAILS, DETAILS, DETAILS!  It helps the underwriter read between the lines on an application.  More importantly, it clarifies issues and solves questions that the underwriter may have regarding your application.  I may at times even ask for special considerations I feel are appropriate for your personal situation.

Preparation Is The Key Plan Be Prepared Concept Just Prepare To


I will advise you once your application is submitted it normally takes 4 to 8 weeks to receive an offer from the insurance company regarding your application for disability insurance.

I will ask you to review the application carefully and make sure all the answers are correct and complete.  If not, notify me immediately so I can communicate any changes to the insurance company.

I normally submit an application for consideration only.  You are not obligated during the processing of your application and the insurance company is not on the hook until your application is formally approved, you have accepted the offer for coverage and the company has received your initial premium to put the policy in-force.  

A conditional receipt is issued to the insured (you) when a premium is paid at the time of application.  This provides you with temporary coverage during the processing of your application.  A conditional receipt will be determined on a case by case basis.

I recommend premiums are paid via monthly bank withdrawal.  I suggest these automatic payments so no need to worry about a premium notice being lost in the mail, and it’s easier to budget and pay premiums on a monthly basis.  Premium modes of quarterly, semiannual or annual are also available.  I can discuss with you the premiumode that best meets your personal situation at the time of application or policy delivery.

I will follow your application closely and contact you once we receive word regarding your status.  The insurance company must be notified if you have any change in health or visit a doctor during the underwriting of your application or subsequent to the delivery of a policy.  Try to hold off on going to the doctor for any other reason if you can.  A life-threatening emergency is obviously an exception.

You will never hear me tell you disability underwriting is simple or easy.  However, I will always tell you it is worth your time and effort to follow me and let me take you through the entire process, and after all the steps have been completed.  You will have acquired a valuable income protection policy.  One of the most important financial contracts you can own throughout your professional and working life.


We want to review the policy carefully and make sure you understand the benefits, provisions, and limitations as well as make sure it was properly issued with all of the benefits applied and approved for with the insurance company.  Your policy will be tracked for an annual review.  I will always assist you with the appropriate forms should a claim arise.


Let me help you put the pieces of your underwriting puzzle together.

My ultimate goal together with you is matching an anticipated offer with the final underwriting offer.  This adds up to an underwriting success when an offer is accepted by you and a policy is put in force.  It is about you winning and me helping you to win!

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Marc Maretsky Personal Insurance Services based in Beverly Hills, serves all of California and the United States.  I help my clients acquire life, disability, long-term care, and critical illness insured solutions, as well as enroll them into Medicare when eligible.

“No matter how fast technology changes our world and everything around us.  I believe the personal touch and a human voice are more important than ever.”

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