Disability insurance is essential to protecting your hard earned income. If you have anyone who relies on your income, disability insurance provides a safety net so you can still pay for your rent, groceries, student loans, or anything else if you’re unable to work.
With how important disability insurance is, we understand that the process of applying and getting coverage can feel daunting. This FAQ will cover the questions we get from clients all the time, and hopefully make you feel better about getting the disability insurance application process started.
Who do I buy disability insurance from?
You should buy your disability insurance from an independent agent. An independent agent is able to sell you coverage without being tied to one company. Of the existing insurance companies, there is a Big 6 that offer the most competitive and expansive coverage. Those companies are: Amertias, Principal, Standard, Guardian, Mass Mutual, Ohio National.
Your independent agent should be able to show you the pros and cons of the best coverage options for you with a comparison quote.
What should I look for in a disability insurance quote?
Your disability insurance quote will cover a number of items. Here are a few to take note of:
- Benefit amount, which is the amount that would be paid to you monthly if you were on disability claim.
- Elimination period, which is how long you would need to wait after becoming disabled to receive your benefits (the most common is 90 days).
- Benefit period, which is how long you receive benefits (either a set number of years or to a certain age, like 65, 67, or 70).
- Riders, which are optional add-ons that provide additional benefits. Common riders include a Cost of Living Adjustment, Future Increase Option, or Automatic Increase Rider.
- Cost of Living Adjustment increases your benefit each year you are on claim to help decrease the effect of inflation.
- Future Increase Option is the ability to increase your monthly benefit without needing additional medical underwriting. This increase usually happens on policy anniversaries and financial verification is generally needed.
- Residual Benefit Rider allows you to collect benefits while residually disabled and still working. The definition of this rider varies by company but generally means you can receive payment for a 20% or more decrease in income due to disability.
- Mental Limitation, which can limit your benefits for mental, nervous, or substance abuse.
- Definition of disability, which determines how broad the scope of disability is in order to go on claim.
- Own Occupation or Specialty Specific definition means that your policy will pay your claim if you can’t work in your specific occupation, even if you can be working in another field or specialty. This type of coverage is important for physicians or other specialists.
- Premium, which is how much you would pay for that policy split up into options like monthly, quarterly, or annually. Generally paying fewer times per year is the least expensive option.
You should be able to ask your disability insurance agent for a comparison quote that shows you the benefits and premiums of multiple insurance companies, so you can make an informed choice about the company your coverage will be through.
How do I fill out and sign my application?
Most insurance companies allow online applications that are signed using the company’s online portal or DocuSign. Your insurance agent will facilitate indicating what fields of the application need to be filled out and send it to you for signatures.
If you’d prefer to do a paper application, the forms can be mailed to you with a return envelope or signed at your agent’s office.
What happens after I submit my application?
The insurance company will generally request a phone or online interview be completed. This interview will cover your demographic information and medical history. They will ask about any recent doctor’s visits or medications you take, as well as your family history.
Insurance companies also require financial documentation to confirm your salary and the benefits they can offer you. Generally a copy of your latest tax return or pay stubs will suffice.
Will I have to do a medical exam?
Potentially. Insurance companies have different parameters on when exams are required. These parameters are usually based on the benefits you’re applying for, your age, or your medical history.
If it is required, a nurse can come to your home or place of work to complete the mini-exam. They are designed to be quick and easy to not add too much to your plate during the application process.
How long will this process take?
It generally takes three to six weeks from applying to getting your insurance offer. A lot of this time is dependent on how quickly you are able to submit your financial information and complete the phone/online interview.
Sometimes insurance companies need to request medical records from your doctor, which can also extend the underwriting process. If they do need medical records, the insurance company will handle ordering and following up on them.
When do I know my coverage is active?
Your coverage is active once your policy is approved, you’ve signed the delivery documents, and paid your first premium.
You might still have questions after this brief Q&A, but the good thing is that you are not alone during the disability insurance application process. Your insurance agent should be with you every step of the way by providing quote comparisons, answering questions, and advocating for you during underwriting.
May is Disability Insurance Awareness Month in the US, and there is no better time to review your disability insurance coverage. If you’re ready for a quote or for a no-cost review of your existing coverage from an experienced, independent insurance agent, contact me today.