Applying for a Disability Insurance Policy

Welcome to Season 5, Episode 21 of Winning Isn't Easy. In this episode, we'll dive into the complicated topic of "Applying for a Disability Insurance Policy."

Thinking about applying for disability insurance? Before you check a box or sign on the dotted line, join disability law expert Nancy L. Cavey for a deep dive into the often-overlooked first step in protecting your income: the application process. In this episode, Nancy breaks down why disability insurance is so important - especially for professionals, business owners, and anyone planning for life’s what-ifs - and what really happens when you apply. We cover the essentials: What’s under the hood of an application? What medical or occupational info matters most? And what are the red flags that could trigger a denial - or follow you to future applications? Nancy explains how to avoid the most common and costly mistakes, how insurers evaluate risk, and how to protect your insurability now and later. Whether you’re new to disability insurance, in the middle of applying, or trying to recover from a denial, this episode is your practical guide to starting smart. Because getting covered is more than just paperwork - it’s the first step in securing your financial future. Let’s get started.

In this episode, we'll cover the following topics:

One - What Are the Six Common Reasons an Application for Disability Insurance Coverage Is Denied by Disability Carriers?

Two - How Can a Disability Carrier’s Refusal to Offer You a Disability Policy Impact Your Ability to Find Disability or Life Insurance?

Three - What Are the Three Types of Underwriting in Issuing an Individual Disability Insurance Policy, and Why Does It Make a Difference to You?

Whether you're a claimant, or simply seeking valuable insights into the disability claims landscape, this episode provides essential guidance to help you succeed in your journey. Don't miss it.


Listen to Our Sister Podcast:

We have a sister podcast - Winning Isn't Easy: Navigating Your Social Security Disability Claim. Give it a listen: https://wiessdpodcast.buzzsprout.com/


Resources Mentioned in This Episode:

LINK TO ROBBED OF YOUR PEACE OF MIND: https://mailchi.mp/caveylaw/ltd-robbed-of-your-piece-of-mind

LINK TO THE DISABILITY INSURANCE CLAIM SURVIVAL GUIDE FOR PROFESSIONALS: https://mailchi.mp/caveylaw/professionals-guide-to-ltd-benefits

FREE CONSULT LINK: https://caveylaw.com/contact-us/


Need Help Today?:

Need help with your Long-Term Disability or ERISA claim? Have questions? Please feel welcome to reach out to use for a FREE consultation. Just mention you listened to our podcast.

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Please remember that the content shared is for informational purposes only, and should not replace personalized legal advice or guidance from qualified professionals. 

Transcript

Nancy Cavey [00:00:00]:
 Foreign hey, I'm Nancy Cavey, national ERISA and individual disability attorney. Welcome to Winning Isn't Easy. Before we get started, I've got to give you a legal disclaimer. This podcast is not legal advice. The Florida Bar association says that I have to say that. And now that I've said it, nothing will ever prevent me from giving you an easy to understand overview of the disability insurance world, the games that carriers play, and what you need to know to get the disability benefits you deserve. So off we go. Welcome to today's episode where I'm going to dive into a topic that's overlooked.
 
 Nancy Cavey [00:00:46]:
 It's applying for a disability insurance policy. Now, whether you're a professional, a business owner, or simply someone who is thinking about applying for disability insurance coverage, this episode is packed with critical information to help you protect your income and your future. And what we're going to be doing today is explore why disability insurance matters, what the application process really involves, and the most common reasons people get denied coverage. You'll learn how to avoid those costly mistakes that could jeopardize your ability to get coverage, not just now, but down the line with other insurers as well. If you're thinking about applying for disability insurance or have already started the process, this is an episode you can't afford to miss. Because I'm going to talk with you about the mistakes that you can make that I've seen as a disability insurance lawyer when someone is actually trying to apply for their disability insurance benefits as and the claim gets denied because of mistakes they made in the disability insurance application process. Got it. So I'm going to talk about three things today.
 
 Nancy Cavey [00:01:55]:
 Number one, what are the six common reasons that an application for disability insurance coverage is denied by carriers? Number two, how a disability insurance carrier's refusal to offer you a disability policy impact your ability to find disability or life insurance in the future. And three, what are the three types of underwriting it is used in issuing an individual disability insurance policy and why it makes a difference to you. All right, let's take a break before we come back with this episode.
 
 Speaker B [00:02:29]:
 Have you been robbed of your peace of mind by your disability insurance carrier? You owe it to yourself to get a copy of Robbed of your peace of Mind, which provides you with everything you need to know about the long term disability claims process. Request your free copy of the book@kvlaw.com today.
 
 Nancy Cavey [00:02:51]:
 Welcome back to Winning Isn't Easy. What are the six common reasons that an application for disability insurance coverage is denied by a disability carrier? I want to Congratulate you first on making the wise decision to purchase a disability insurance policy. My father was a World War II naval aviator and he understood firsthand how life can change in an instance, you can be injured, wounded, or even killed. And after the war, he made the prudent choice to get a disability insurance policy, hoping he'd never have to use it. And when he was later diagnosed with leukemia, that decision turned what was really crucial to the financial stability of our family during obviously a very difficult and lengthy time. It's really essential that you understand the importance of providing your insurance agent and the disability insurance carrier with a complete and truthful medical history. Failing to do so can backfire. In fact, it can result in the denial of coverage.
 
 Nancy Cavey [00:03:51]:
 It can even impact your ability to obtain coverage in the future. And it can result in the cancellation of your disability insurance policy when you need it most. And I've had that happen to one of my clients and in the course of my practice and when he didn't tell the truth on this application. So I'm going to be using him as an example. So let's talk about the disability insurance coverage application. When you apply for the policy, the agent is going to do a pre screening process to identify any potential medical issues or risk factors that would lead to the denial of the insurance policy or which might require a rider. You have the legal obligation to answer all these questions accurately, particularly those concerning your medical history. Misrepresentation or omission can lead to an outright denial, difficulties getting coverage elsewhere, and even a rescission of your policy if you file a claim.
 
 Nancy Cavey [00:04:50]:
 And I will promise you that's particularly true if you've applied for an individual disability insurance policy. I will tell you that it's not uncommon for these applications to be denied, even for people who consider themselves to be healthy. And worse yet, I have seen many cases where when the person who has an individual disability policy applies for benefits, that the disability carrier does a thorough investigation of the person's medical background to learn of reasons why they might be able to deny the claim because of omissions or even misrepresentations. And it's just not medical conditions, it's. It might be activities that they've engaged in that they in fact were doing that they denied at the time the policy was issued, which impacts underwriting. Okay, so get out your pencil, your pad. Let's talk about the six common reasons that an application for disability insurance coverage is denied. Number one, you have a preexisting condition.
 
 Nancy Cavey [00:05:49]:
 Obviously the disability carrier doesn't want to insure you for a preexisting condition that you are actually treating with at the time you apply for benefits. Number two, you have an unknown medical condition. In other words, you're having problems, but nobody's got a diagnosis yet. Number three, you have a pending medical procedure. Of course, the carrier doesn't want to insure you for disability just before you're ready to go into the operating room. Now, number four, if you're a physician, they're going to potentially do a search of pharmacy records. And if you have written prescriptions for yourself, that will kill any insurance coverage application. Or number five, your job is too dangerous.
 
 Nancy Cavey [00:06:35]:
 Number six, your hobbies are too dangerous or risky. So let's quickly review each of these. You've got a pre existing condition. So if you have cancer, diabetes, fibromyalgia, long Covid, chronic or progressive diseases, those are red flags for carriers. And these conditions, unfortunately, significantly increase the likelihood of future disability, making you a high risk. And as a result, carriers may deny coverage entirely or issue a policy rider that excludes a specific medical condition. And in some cases, even mild or managed forms of these illnesses would trigger concern and a denial. Number two, you have an unknown medical condition.
 
 Nancy Cavey [00:07:14]:
 You're experiencing symptoms, but nobody's figured out what you've got and there's no formal treatment plan. They're going to review this situation and say, most likely, look, this is too unpredictable. We can't tell whether this condition is temporary, permanent, or potentially life threatening. So until this condition is fully diagnosed and stable, most carriers will decline that application. It's clear that the best course of action is to wait until you actually have a diagnosis and a treatment plan and then go back to the agent and talk about reapplying for coverage. Now, number three, you have an upcoming medical procedure. As I said, if you're scheduled for surgery, you're undergoing medical treatment. You're pregnant.
 
 Nancy Cavey [00:07:57]:
 Disability carriers are going to deny coverage until you're fully recovered. And in the case of pregnancy, it will be until after childbirth. This protects the carrier from assuming financial liability during a high risk period when the probability of disability is temporarily increased. If you're a physician and you've written that prescription, well, I will tell you, they're very, very, very concerned about why you're writing this prescription. Are you treating yourself for a condition that could be disabling? Do you have a drug issue? Without a medical chart documenting symptoms, a diagnosis and a rationale for the medication, this is going to appear to be suspicious or fraudulent. So please don't self Diagnose and don't do hospital corridor hallway consults with your colleagues. I have that a lot. I have to tell my physician clients, go schedule an exam, have a physical exam, have a record.
 
 Nancy Cavey [00:08:56]:
 And I know a lot of folks don't like to do that because they don't want to create a malpractice risk. But there are times when in fact you need to do this not only for your health, but that there is proper documentation. So please see a colleague or medical professional for treatment and avoid self prescribing. Your job is too dangerous. Now look, we know that there are certain professions that are inherently dangerous or carry a high risk of physical harm. Law enforcement, firefighting, aviation. All of those types of occupations are high risk and carriers will often decline to offer coverage. Unless of course it's through for example the pilots union or through a specialty insurance company that offers insurance for firefighters.
 
 Nancy Cavey [00:09:46]:
 Alternatively, they may offer reduced benefits, limited duration of benefits, or offsets. And of course since most of these high risk occupations result in injury at work, there might be an offset for workers comp benefits. There also might be a significant exclusions or premium increases based on the nature of your job. Just be clear that you're going to pay a higher premium than the average person on the street. Your hobbies are too dangerous or risky. Just as your occupation matters, your recreational activities matter. So if you participate in high risk activities like heli, skiing, scuba diving, amateur aviation, you race, motorcycles, boats or cars, I will tell you that most insurance carriers are going to exclude coverage from injuries resulting from any of these activities. Even assuming they offer you a policy.
 
 Nancy Cavey [00:10:38]:
 They may actually also say look, if you engage in these activities X, Y or Z, no coverage. And so you just have to decide whether you are going to give up or discontinue these hobbies or accept limited coverage. And again, this is a personal decision. But you do need to understand that not only the nature of your work activities, but your hobbies can create specific risks that carriers simply don't want to deal with on a risk basis. My strong suggestion is that before you apply for disability insurance, you work closely with an experienced agent who can pre screen your medical history, your occupation and your lifestyle. This proactive approach will help match you with the right carrier and improves your chances of approval. And I want you to remember that being denied coverage can significantly impact your ability to get future disability or even life insurance. Why? Because one of the questions on the application is have you been denied coverage? And if you lie and they find out about it and you subsequently file a claim, your claim is going to be denied and the policy will be rescinded and your premium will be refunded and you're sitting there with no coverage.
 
 Nancy Cavey [00:11:55]:
 I think that not only consulting with a knowledgeable agent, but if you are a high wage earner, you should be consulting with a skilled disability insurance attorney. You want to take that coverage and quote that you get from the disability agent and have a disability attorney review it. Why? Because many times high professionals have multiple policies and there are all sorts of terms in these policies that interact with each other. Some policies will say, if you have another individual disability insurance policy, we won't pay any benefits. Others will say, if you have an ERISA disability policy and an IDI policy, individual disability policy, only one of these will pay. Or it might say there's an offset. So you might not understand that buying one policy may be absolutely worthless because it's offset by the other policy that you have. So don't let agents sell you stuff without getting all of your disability policies into and having an experienced ERISA disability IDI disability attorney look at these to be able to explain to you, well, this policy says this, that policy says something else, and this is how they interact.
 
 Nancy Cavey [00:13:05]:
 And now you can make an intelligent decision about whether you want a disability policy and the nature of that policy and the interaction. Got it? Let's take a break. Foreign welcome back to Winning Isn't Easy How a disability carrier's refusal to offer you a disability insurance policy can impact your ability to find a disability or life insurance policy. Now, the application process for disability insurance is detailed and demanding. You've seen the questions on the application and you should not blow through these. The questions that you are going to be answering and how you answer them can shape the outcome of your application. In other words, are you going to get coverage? But it will impact your future eligibility for disability and life insurance policies. One of the most critical sections of the application involves your medical history.
 
 Nancy Cavey [00:14:14]:
 And you're going to be asked questions like, what's your family's medical history? Now, you may wonder why, because they're not applying for benefits. You are. Their actuaries are going to take into account your medical history in deciding whether to take the risk of likelihood that you might develop one of the medical problems your family has had and how that would impact them. They want to know the names and contact information for your doctors. They want to know if there are any known medical conditions and their onset date. They want to know the medical tests that you've undergone and the results. They want to Know the diagnoses, the current treatment you're receiving, the medications you're taking, a history of your symptoms, past work related injuries, involvements in motor vehicle accidents. And by the way, there are indexes where they can check in regards to whether you've been in a motor vehicle accident.
 
 Nancy Cavey [00:15:07]:
 They're also going to want to know about your participation in high risk sports or hobbies. Now those are common questions and you don't want to lie. You don't want to admit things either. So the reason is what's going to happen if you don't tell them the truth? Failing to disclose accurate information, whether intentionally or due to forgetfulness or omission, can have serious repercussions. If your answers are misleading or incomplete, the carrier may do one of several things. They may deny your application outright. They may rescind your policy after it's issued. They may deny your disability claim when you have to stop work and apply for your disability benefits and you need it most.
 
 Nancy Cavey [00:15:50]:
 And they may refer you to fraud for fraud investigation. They will refer you to the Department of Insurance of your applicable state for consideration of a fraud investigation and potential prosecution. And as I said, I have been involved in this situation where my doctor client did not tell the truth about his preexisting medical treatment and it was for the very same condition in which he claimed he was disabled. And the carrier found out about it and got the records. They actually rescinded the policy, refunded the premium, and we were at the lawsuit stage. Ultimately we gave up the claim because he had committed fraud. And as part of the settlement agreement we reached with the carrier, he got nothing, I didn't get paid. But they agreed not to refer the case to the Department of Insurance for fraud and, you know, potential criminal consequences.
 
 Nancy Cavey [00:16:52]:
 So, you know, this behavior can go beyond a simple, we're not going to pay your benefits to an investigation to criminal prosecution. So what's the impact of being declined for insurance? You might think that getting turned down by one carrier is no big deal and you can apply elsewhere, but that's not how it works. Every major disability insurance application asks whether you've been declined before. And the past denial can be a red flag in the application. It can result in either a denial of the coverage or an extremely high premium. Now, if you lie and say you haven't been declined, your agent is required to disclose the truth to protect their relationship with the carrier because they're not going to jeopardize their relationship with a carrier. But more importantly, they're not going to jeopardize their license. Lying to a insurance agent or a carrier doesn't help.
 
 Nancy Cavey [00:17:46]:
 If they discover this deception, they will rescind the policy and deny your claim. So please Being honest up front allows your agent to work strategically with you on your behalf to find the right coverage for you. But the impact goes beyond disability insurance. A decision by a disability carrier to decline to offer you coverage can affect your ability to obtain life insurance. Why? Insurers view the overall insurability of a person as a measure of risk. If if you've been denied disability coverage, they may view you as a high risk applicant for life insurance. So what must you do during the application process? My strong suggestion, before you even start this process is to contact all the pharmacies you've used to get a full list of medications that have been prescribed to you. And I will tell you that disability carriers do pharmacy record checks not only at the application process, but when you apply for your disability benefits because you're unable to work, you want to reach out to any doctors you've seen, even years ago, and get a copy of the medical reports.
 
 Nancy Cavey [00:18:58]:
 Why? Because you want to cross reference the doctors listed both on your prescription records and doctors listed in your medical reports that you may have forgotten about or that the doctor may have copied their report with. So you may have seen a specialist who copied the report to your primary and you also want to ask your auto insurance agent to check your accident history. You want to run a background check on yourself to confirm public records. You want to speak with close family members who might remember past injuries or illness. Those are the kind of things I think you should be doing before you're applying for your disability insurance coverage and you want to provide all that information to your agent so that they can represent you properly and consult directly with the underwriting departments of various carriers. I think skipping these steps can lead to costly mistakes and a possible denial of your claim if and when you have to file a claim for your benefits. I promise you, carriers routinely run their own background checks, including pooling your pharmacy records, your claims history, public records. They'll even look at your social media.
 
 Nancy Cavey [00:20:05]:
 But by doing this work up front, you can increase your chances of securing a solid policy with favorable terms. Honesty Matters let's take a break.
 
 Speaker B [00:20:18]:
 Are you a professional with questions about your individual disability policy? You need the Disability Insurance Claim Survival Guide for Professionals. This book gives you a comprehensive understanding of your disability policy with tips and to dos that will assist you in submitting a winning disability application. This is one you don't want to miss for the next 24 hours, we are giving away free copies of the Disability Insurance Claim Survival Guide for Professionals. Order yours today@disabilityclaimsforprofessionals.com.
 
 Nancy Cavey [00:20:54]:
 Welcome back to Winning Isn't Easy. What are the three types of underwriting is used in issuing an individual disability insurance policy? And why does it matter to you? Now let's talk about basics. There are generally two types of disability insurance policies. The first is typically provided to you by your employer and governed by a federal law called erisa, the Employer Retirement Income Security Act. And it's not a friendly act. These policies often involve minimal or no underwriting. You simply sign up during your employer's enrollment period, much like you do for group insurance. The second type of policy, the preferable one and the more expensive one, is an individual disability insurance policy.
 
 Nancy Cavey [00:21:36]:
 And that requires in depth underwriting. Let's talk about underwriting. I think that that's really crucial because underwriting will impact whether you even qualify for coverage, how much you will potentially pay for coverage, and what kind of protection they may offer you. So what's underwriting? Underwriting is the process insurers use to evaluate the risk of insuring an individual. It's basically a risk analysis based on actuarial records and documentation. And I assure you that every carrier can tell you what the life expectancy is of a person who has this disease or that disease or a combination of these diseases. They track that. Now, a disability insurance underwriter is going to review your application and they're going to decide, well, should we even offer a policy? Two, what level of benefits should we offer? Three, are there any exclusions of medical conditions or are there any riders that will be added? What's the premium? And the decision is based on a combination of factors, including your health, your medical history, your occupational history, your lifestyle and hobbies, and your income level.
 
 Nancy Cavey [00:22:46]:
 What are the three types of underwriting? So now we've got the basics down. Number one, there's the traditional underwriting, and it's the most comprehensive type of underwriting. And they're going to evaluate your complete medical history, your current and your past health issues, your income levels, your employment details, your occupation and associated risks, lifestyle choices, and recreational activities. Now, traditional underwriting usually results in a very robust and cost effective policy if you're in good health with a stable income at a low risk occupation. What's number two? Well, that's a simplified issue, underwriting, and this is less rigorous. It's often used with people who have mild health issues or other underwriting issues the application process is faster and may not even require a medical exam. But there are some very significant trade offs. One is a lower benefit limit.
 
 Nancy Cavey [00:23:42]:
 Two is a higher premium. Three is more Exclusions and limitations Now, a simplified issue policy might be helpful if you've had trouble with underwriting, getting coverage through traditional underwriting, or you need this coverage quickly. Number three the automatic issue or what's called supplemental coverage. High earners often seek coverage beyond the limits of their traditional policy, and since most benefits are capped at around 60% of your gross income, you may need supplemental policies. So this is how it works. You've purchased a fully underwritten policy at the highest amount allowable. Within 90 days of the issue, your insurance agent submits a policy to an automatic issue or supplemental carrier and that second carrier issues a supplemental policy without any additional underwriting. This strategy ensures that more of your income is protected in case of long term disability, especially if you're an executive, a CEO, cco, a physician, a lawyer, or other high income professionals.
 
 Nancy Cavey [00:24:45]:
 Now that you've understood the difference between the underwriting types, you're better equipped to choose the disability policy that aligns with your needs, your lifestyle and your income. I think you should be working with a knowledgeable insurance agent who understands how to navigate these options and this lets you secure the coverage that's best for you and your family. And if you have multiple insurance policies, be they ERISA or or not erisa, I think you should also be consulting with an experienced ERISA and IDI attorney who can look at all these policies and tell you exactly what you bought and more importantly, how they interact, because the interaction can impact the total amount of benefits you get. Many are surprised to learn that some policies will say if you have an individual disability policy, we won't pay you benefits. Under this other policy we the other way around or we'll limit what we pay. So it's really important if you've got multiple policies to understand not only each policy but how they interact with each other. Got it. Thank you for tuning in to this week's episode of Winning Isn't Easy.
 
 Nancy Cavey [00:25:51]:
 If you found this episode helpful, please take a moment like our page, leave a review, share it with family or friends, and please subscribe to our podcast. The other thing I want to point out is is that at the beginning of each episode description you'll find a link that lets you ask questions. And I love to ask questions. So challenge me. Ask some questions. I'll feature them on future episodes. Please join us next week for another insightful episode of winning isn't easy. Thanks for listening.