The underwriter is the person on behalf of the insurance company who carefully reviews the information provided them regarding your insurance application to determine risk factors, if any, using guidelines and procedures established by the insurance company.  Disability underwriting is strict because the underwriter has only one chance to evaluate the potential risk and make a decision.  In addition, disability claims can cost an insurance company a great deal of money if the underwriter makes a mistake.

I would hope every application is APPROVED AS APPLIED FOR with no changes and all the benefits approved by an underwriter.  This isn’t always the case.  In many situations, an underwriter will review an application, and make an OFFER OTHER THAN AS APPLIED FOR with a policy exclusion(s), benefit modifications or even require an extra premium charge due to the perceived risk the insurance company faces regarding potential future claims.

Your entire body is being evaluated when you apply for an individual disability insurance policy.  HERE ARE SOME SIMPLE FACTS!  Exclusions, policy benefit modifications, or even extra premium charges are common in an offer you might receive for an individual disability insurance policy.

Here are the reasons why medical exclusions are necessary when the underwriter has identified medical history…

♦   that increases the chance of you making a disability claim at some point in the future.

♦   that you have a specific medical problem with clearly identifiable symptoms, such as organ, joint or musculoskeletal disorders.

♦   that an impairment is severe, recent, very specific or likely to recur.

♦   that the risk can be clearly defined and easily excluded.

NOTE:  Paying a higher premium doesn’t work due to the nature of disability insurance.  Let’s say the insurance company increased the premium for this person by 100% but gave full coverage for an excluded back problem.  That person could pay a few months of premiums then immediately turn around and go out on a claim for a back problem.

Since premiums are waived when someone is on a claim, this person would be entitled to full benefits after the waiting period for the entire benefit period.  Without this kind of medical exclusion, the medical risk would be too great for the insurance carrier to assume, and the insurance company would not be able to offer that person the income insurance protection they need for all other disabling conditions.

In assessing your situation, the underwriter takes into account not only your present state of health, which may be fine but also the risk of future problems. It is important to note that a medical exclusion rider doesn’t change the premium of the policy.

You’re probably not aware of common medical conditions you may be treated for such as chiropractic care for back related issues, mental health therapy / medications for depression, anxiety or attention deficit disorder and why these medical issues result in policy exclusions or benefit modifications.

(Source: Top five causes of new disability claims in 2012; Council for Disability Awareness)

HOW DOES AN EXCLUSION ON A POLICY AFFECT A CLAIM?

An exclusion rider generally states that benefits are not payable for disability resulting from or related to a specified medical condition (e.g., asthma), from a disease or disorder of an area or part of the body (e.g., the cervical spine), or injury sustained while participating in a specific activity (e.g., rock climbing).  The intent of the rider is to exclude or restrict coverage for claims resulting from or related to a preexisting medical condition, or claims resulting from participation in a potentially hazardous activity that presents an increased RISK of potential disability to the company.

Regardless of an exclusion rider on a policy, if a disability should arise you should submit a claim form to determine if the exclusion applies and let the claims department evaluate the facts and circumstances of your claim to determine your eligibility for benefits assuming all of the other terms and conditions of the policy are met.

If your cervical spine was excluded from coverage due to a history of a herniated disc, disabilities caused by or related to the herniated disc or other associated conditions (e.g., sprains, strains, degenerative disc disease, arthritis, etc.) would not be covered.  However, in the event the disabling condition was caused by an unrelated traumatic event such as an automobile accident and the claims department determines the preexisting condition did not contribute to the disability, the exclusion rider would not apply.  In this event, you could have a covered claim and benefits would be paid, even though that traumatic event resulted in an injury to your back.  A cervical spine exclusion might also pay benefits for a laceration, fracture or burns.

Further, if you suffer from two simultaneous disabling conditions where one is specifically excluded from coverage under an exclusion rider and one is not, then you may have a valid claim if the covered condition renders you disabled and if all of the other terms and conditions of the policy are met.

DISCLAIMER: This is a hypothetical claim example and meant only to explain how an exclusion rider or a modified policy might be applied in the event of a claim for disability benefits.  Disability claims can result from countless causes.  A claim for a disability is evaluated on its own set of circumstances, and paid according to the wording of the specific exclusion as well as the terms and contractual provisions of the policy.