How to Apply For Disability Insurance

Protecting one's ability to work and earn an income should be a priority for any individual who is currently dependent on his/her income. Some employers will provide disability insurance as a part of their employee benefits package, however those individuals who are not provided with coverage at work may be able to secure disability insurance on an individual basis. Below is a summary of the process of applying for individual disability insurance.
Selecting A Disability Insurance Policy
Disability insurance, perhaps more than other types of insurance, can vary greatly from one policy to another. Since each policy is designed to pay benefits under different circumstances, it is important that consumers review and compare the features and definitions closely in order to make an educated decision. Considering that this coverage may one day become a primary source of income, consumers should apply for a comprehensive policy that will pay the largest amount of benefit in the greatest number of circumstances.
Enough independent research can potentially be done to make a well informed decision. However, it is necessary to eventually work with a licensed agent when applying for disability insurance, thus it makes sense to work with one throughout the research process as well. Since agent compensation is paid by the insurance companies, there is no additional cost to working with a highly experienced agent vs. less experienced agent. It would therefore be advantageous to find an agent or advisor who specializes in disability insurance and represents multiple insurance companies.
What You'll Need To Prepare
The application process is fairly thorough but can be streamlined when working with an advisor who understands both your situation and the disability insurance underwriting process. When applying for disability insurance, applicants are generally required to provide the following:
The Application - Completing the application is fairly simple since it primarily asks for personal information that applicants should know from memory. To further streamline the process however, it will be helpful to have one's driver's license and medical history information easily available. Applicants will need to provide dates of any medical procedures or treatments as well as the name and contact information for any physicians consulted in the past. Providing honest and detailed responses will help to reduce processing time.
Financial documentation - This can be as simple as providing a copy of a recent paystub, or may require specific pages from an applicant's tax returns. The insurance company's goal is to understand how much income needs to be protected. Therefore, the necessary forms will depend on how the applicant's income is earned and whether he/she is a salaried employee, sole proprietor, corporation owner, etc.
Your Health Matters
Medical underwriting is a big part of the application process for individual disability insurance and applicants must be fairly healthy to qualify. This is one of the primary reasons that individuals are recommended to apply young, to take advantage of potentially better health.
Medical underwriting will include a few different steps:
Insurance medical exam - The insurance medical exam is composed of a medical history questionnaire and normal lab work which is completed by a paramedical services provider. The insurance medical exam can be completed at an applicant's home/work or in some cases may also be done at the provider's office location.
Personal Phone Interview - The personal phone interview is essentially a repeat of the original application that is completed. This serves as a cross verification process and is conducted by a third party service contracted by the insurance company.
Pharmacy Scan & Medical Records - In addition to the insurance medical exam and phone interview, insurance companies may also order pharmacy scans and medical records from physicians with which an applicant has consulted in the past.
This process provides the insurance company with the medical information needed to decide whether or not a policy can be offered, and if so, whether a medical exclusion rider or increased premium is necessary.
Once an insurance company has been selected, the application process should take between 3-8 weeks. Applicants who are extremely healthy, young and applying for relatively low benefit levels can expect the process to take between 3-5 weeks on average, and those who are applying for larger benefit levels or have more complex medical histories can expect to take between 6-8 weeks due to potential delays in retrieving medical records.
Once the application is approved, consumers should review their policy carefully to ensure that no errors have been made throughout the issuing and printing process. Although infrequent, mistakes may occur and the issued policy may vary from that for which was applied. Any alterations made to the application or policy will require the policy owner's signature of acceptance, so consumers need not fear medical exclusions or amendments being amended without their knowledge.
Michael Relvas is a Certified Financial Planner™ professional and also the owner of MR Insurance Consultants, a financial services firm specializing in own occupation disability insurance for physicians and other professionals nationwide. Michael has helped hundreds of Americans protect their income and continues to offer educational consumer resources such as the Buyer's Guide on disability insurance for physicians. For more information or assistance with applying for disability insurance, contact Michael at 1-800-817-4522.

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