February 4, 2020

Application Process for Long-Term Disability Insurance

Protecting your lifestyle starts with protecting your income. Disability insurance provides a solid foundation for your financial future by providing you income when you’re unable to work due to an illness or injury.

Disability Insurance is more complex than other types of insurance. We recommend requesting quotes from an independent broker, who will be able to shop the top insurance carriers for you and provide an unbiased analysis. To get started with finding the right plan, you could request quotes here or learn what exactly disability insurance is and why physicians need it.


What is Underwriting?

When most people hear the word “disability,” they immediately think of accidents. But the reality is that 90% of disabilities are actually caused by illnesses.1

After you choose the right disability insurance policy, you will need to go through the underwriting process for an approval. After submitting an application, it takes 3 to 6 weeks to receive an offer. However, that period could be shorter or longer, depending on how long it takes to receive and underwrite (review) the required medical, financial and occupational information. Most disability insurance companies have electronic application systems that can expedite the underwriting process.

Underwriting is the process an insurance company uses to determine the final approval terms & conditions. When you first apply, you’re applying for a “quoted” rate but the rate is only an estimate based on the information you provided.

There will be requirements such as financial documentation, lab testing, signing of applications, etc. during the underwriting process.


Requirements for the Applicant

Financial Underwriting - Documentation Requirements

Just as financial institutions require income verification for mortgages, loans, etc., the insurance company will require income verification in the form of a payroll stub, W-2 and/or tax return. This will be required in order to determine if you are financially eligible for the coverage amount you are applying for. Typically, your total disability insurance coverage cannot exceed 60% of your income. Your independent broker will be able to determine how much you would qualify for while initially discussing the plans they had quoted you.

Medical Underwriting - Phone Interview & Lab Testing

The first step of medical underwriting would be to complete a phone interview. During this interview, you will be asked medical information in order for the insurance carrier to fully assess your medical history. The insurance company is very aware of the sensitive nature of this interview and does not share this information with anyone.

In most cases, blood and urine samples will also be required (waived for residents & fellows). This depends on your health history, age and the amount of insurance for which you applied. The insurance company will pay for the entire cost of the exam. If there are any health issues, coverage may still be offered but with modified benefits, a particular condition excluded from coverage, an extra premium may be charged because of adverse health history, or it may not affect the offer at all.

Preparation tips for exams:

  • ‣ Fast for 12-14 hours prior to exam
  • ‣ Avoid strenuous exercise for 12 hours prior to exam
  • ‣ Limit caffeine and nicotine intake 1 hour prior to exam
  • ‣ Drink a glass of water 1 hour prior to the appointment
  • Information to have available:
    • Valid drivers’ license or picture identification
    • Date and reason for your most recent medical visit
    • Information about medications you have taken
    • Diagnoses and dates of significant medical events
    •  Name and contact information of your primary care physician and any other treating physicians or specialists
    •  Family medical history, including any major medical conditions and onset ages for immediate family members


Special Underwriting Consideration Programs

Most insurance companies have Special Limits & Streamlined Underwriting for New Professionals. These programs will make the underwriting process simpler for medical & dental students, residents, fellows and first year attending physicians.

Students, residents, fellows and first-year professionals often lack the earnings history necessary to qualify for disability income insurance, yet have tremendous future earnings potential. Through the programs, you could be underwritten without proof of income. These programs would also waive lab testing, paramedical exams or inspections, and only a phone interview would be required.

For example, if you are a resident, you will be eligible for $5,000 monthly benefit without providing income documentation, without completing lab testing. All you would need to do is sign an application and complete a phone interview.

Contact us to find out if you would qualify for one of these programs.


Underwriting Review

The underwriting review will consist of the following.

Pharmacy Report - This report is a database that collects the history of your pharmacy prescriptions. Any insurance company can request this information and still get a sense of what medical conditions you have even if they do not require a medical exam or medical records.

Medical Records (Attending Physician Statement) - The underwriters may request medical records from any of your physicians to get a better understanding of your medical history, symptoms and treatment. This request usually results in delays as it may take approx. 3-4 weeks to receive.

Motor Vehicle Record - An insurance company considers the information in MVRs to assess your risk profile. The insurer may analyze your violations, suspended license, DUI’s, reckless driving, at-fault accidents, etc.

MIB, Medical Information Bureau - The MIB is exclusively used by insurers to assess your medical risk and eligibility for insurance. This database is sometimes described as an "information exchange" because insurance carriers contribute their underwriting medical information about applicants, which can be used by other insurers who later search the database. If you submitted medical information for previous insurance applications, this database most likely has it.

Avocations - Some extracurricular activities are deemed risky by insurance carriers. They include, but are not limited to: skydiving, motor-vehicle racing, scuba diving, rock climbing and mountaineering. Depending on the frequency and degree of participation, the underwriters may exclude your activity from the policy. For example, if you are a frequent PADI certified scuba diver any disability injury from scuba diving will likely not be covered.

Financial Considerations - Certain income documentation will be required for the underwriters to fully consider your finances. If you are a salaried employee, the requirements would be a most recent paystub, W2 and/or most recent 1040 tax return with all supporting schedules. If you have a 1099, you will need to provide the 1099, any W2s, paystubs and/or 1040 tax return. If you are a business owner or partner, you will need to provide K-1, Corporate Tax Return, Form 1040, any W2s, and any 1099s. The insurance companies will determine your total gross income (or adjusted gross income if you are an owner/1099 employee) and use that amount to determine the coverage amount you qualify for.

Occupational Considerations - In order to qualify for long-term disability insurance, you will need to be working without limitations and for a minimum number of hours per week. Most companies only offer coverage as long as you are working at least 30hrs on average per week. Principal would offer coverage to anyone working at least 20hrs on average per week.

International Considerations - Green Card holders are eligible for the same unrestricted coverage as a U.S. Citizen. Foreign nationals who currently hold an H1B, L1, J1, O1 or TN temporary visas will be considered for disability coverage on a case-by-case basis. If you are a visa holder and want to find out how an insurance company would underwrite you, please feel free to reach out to us to discuss your particular situation.


Approval for Disability Insurance

One of the last steps of the underwriting process is the approval and offer. When you buy disability insurance it is important to understand that the policy you purchase could have limitations once the underwriter has reviewed your medical history.


Any medications you take or have taken in the past, surgeries, diagnosed conditions have to be reviewed to determine if they would lead to a greater risk that you will be disabled in the future vs. someone without the same history. Unlike life insurance, where you are charged a different rate class such as Preferred or Preferred Best, disability underwriters look to use specific exclusions prior to adding additional premium or cutting back benefits. For example, if you have a herniated disk in your lowed back, you could expect the company to put a back exclusion on the policy. This means you will be paid the same for any other condition except for a claim due to your back. The Top 5 insurance carriers (Principal, Ameritas, Guardian, Standard and MassMutual) will further limit this exclusion to just the Lumbar (lower back) so a disability due to your Thoracic or Cervical spine would be fully covered. Further, carriers can often add language to the exclusion that notes exceptions for conditions like fractures, burns, lacerations or neoplasms. This makes it clearer that they are limiting future claims due to the disk or area around the pre-existing condition getting worse, not a new condition like cancer or a car accident where you break your back. This is not always available but it is worth asking for if you can get it.

Mental Nervous Exclusions

While back exclusions are very common, the one that is most frequently used is the mental and nervous exclusion. If you have a history of anxiety, depression or Attention Deficit Disorder you can expect to have this exclusion added to your policy. In the 80s and 90s, policies were not scrutinized for this history and that lead to a lot of stress-related claims, especially with physicians, due to the changes in health care and physician income decreases. The disability policy became a safety net for physicians who were burned out or suffering from stress. Further, carriers had a hard time differentiating between real and fraudulent claims because there is/was no objective testing for anxiety or depression. Symptoms are reported by the insured making it harder to get people back to work. Now there is a much better understanding and broader treatment for mental health. Physicians are following patients, prescribing and adjusting medication as necessary. And, since it is so common, a high percentage of disability policies are issued with some form of exclusion or limitation. Carriers look at severity, stability and duration of symptoms and treatment to make an assessment. If your anxiety is mild to moderate and treated with one medication over a period of time, they you will likely have an exclusion but no rating or cut back of benefit period or removal of riders like the Future Increase Rider.

While the two exclusions above are the most common, there are many conditions that could result in an exclusion… ears or eyes for degenerative type conditions, knees or hips for joint conditions or prior surgeries, digestive track for problems like colitis, etc. Someone’s weight or blood pressure can also lead to multiple health problems.

In order to get an understanding on what we can expect before applying for a plan, feel free to reach out to us and we will shop around for you to get a better understand of expectations.


 1 Integrated Benefits Institute, Health and Productivity Benchmarking 2016 (released November 2017), Long-Term Disability, All Employers. Condition-specific results.