Difficult-to-Place Disability Insurance
Not every client fits within traditional disability insurance underwriting guidelines. Medical history, occupation, financial circumstances, foreign travel or residency, and other factors can sometimes make traditional Individual Disability Insurance difficult to obtain.
Difficult-to-Place Disability Insurance refers to alternative and specialized coverage solutions that may be considered when traditional disability insurance is unavailable or unable to adequately address a client's needs.
What Is Difficult-to-Place Disability Insurance?
Difficult-to-Place Disability Insurance is not a single type of policy. Instead, it refers to disability insurance solutions available for individuals whose circumstances may fall outside the appetite or underwriting guidelines of traditional disability insurance carriers.
Depending on the individual case, specialized insurance markets may be able to consider risks that traditional carriers are unable to insure or may offer alternative coverage structures.
Available options depend heavily on the reason the case is difficult to place and the client's individual circumstances.
What Can Make a Disability Insurance Case Difficult to Place?
There are many reasons an individual may have difficulty obtaining traditional disability insurance.
Common considerations may include:
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Medical history
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Previous disability insurance declines or postponements
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High-risk or unusual occupations
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Hazardous occupational duties
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Foreign travel or residency
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Unusual income or financial circumstances
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Significant amounts of existing disability coverage
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High benefit requirements
A challenge in one area does not necessarily mean that disability insurance is unavailable. Different insurance markets may evaluate risks differently.
What Happens When Traditional Disability Insurance Is Not Available?
When a traditional carrier is unable to offer coverage, the next step may be to determine why the case does not fit traditional underwriting guidelines and whether an alternative market can address that particular risk.
Depending on the circumstances, an alternative solution may involve:
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A different definition of disability
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A shorter benefit period
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A different elimination period
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An exclusion for a particular condition or risk
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An increased premium
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A reduced monthly benefit
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A different policy structure
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Coverage through a specialized insurance market
The available solution will depend on the client's medical, occupational, financial, and other underwriting considerations.
How Does Specialized Disability Insurance Differ From Traditional Coverage?
Specialized disability insurance may provide greater flexibility for certain risks, but the coverage may also differ from traditional Individual Disability Insurance.
Policy definitions, benefit periods, premiums, exclusions, renewability provisions, and other contractual features can vary considerably.
For this reason, an alternative offer should be evaluated based on what protection it actually provides, rather than simply whether coverage is available.
In some situations, specialized coverage may also be used as an interim solution until an individual becomes eligible to reconsider traditional disability insurance in the future.
Who May Need a Difficult-to-Place Disability Insurance Solution?
Specialized disability insurance markets may be worth exploring for individuals who:
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Have been declined or postponed for traditional disability insurance
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Have a significant medical history
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Work in an occupation not insurable with traditional carriers
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Spend significant time outside the United States
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Have unusual financial circumstances
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Require benefit amounts beyond traditional carrier limits
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Have other circumstances that fall outside traditional underwriting guidelines
Every case is different, and the availability of alternative coverage depends on the specific risk involved.
Does a Disability Insurance Decline Mean No Coverage Is Available?
Not necessarily.
A decline from one carrier indicates that the applicant does not meet that carrier's underwriting requirements for the coverage requested. It does not automatically mean that every disability insurance market will reach the same decision.
Other traditional carriers, modified coverage, or specialized disability insurance markets may still be worth considering depending on the reason for the original underwriting decision.
However, there are circumstances where coverage may not be available from any market.
Frequently Asked Questions
Can someone get Disability Insurance after being declined?
Potentially. A previous decline does not necessarily mean that all carriers or specialized markets will decline the applicant. The reason for the decline and the individual's current circumstances are important considerations.
Can someone with a medical condition still obtain Disability Insurance?
Potentially. Depending on the condition and individual circumstances, coverage may be available as applied for or with an exclusion, rating, benefit limitation, modified policy design, or through a specialized insurance market.
Can high-risk occupations qualify for Disability Insurance?
Potentially. Traditional carrier options may be limited for certain occupations, but specialized disability insurance markets may be able to consider some occupational risks.
Can someone eventually move from specialized coverage to traditional Disability Insurance?
Potentially, if the circumstances that originally prevented traditional coverage change, an individual may be able to pursue traditional coverage in the future. Any new application would be subject to the carrier's underwriting guidelines at that time.