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Disability Insurance: How Does One Factor Underwriting, Limitations, or Exclusions?


With disability insurance, insurance companies evaluate the risk an applicant presents and determines exclusions, limitations, restrictions or modification of benefits based on preexisting medical history or lifestyle.

Every disability insurance policy applied for individually undergoes an underwriting process. This process consists of a formal application, a telephone interview, insurance physical, and a report from an attending physician and a pharmacy scan.

With disability insurance, insurance companies evaluate the risk an applicant presents and determines exclusions, limitations, restrictions or modification of benefits based on preexisting medical history or lifestyle.


An exclusion is an amendment to a policy where the insurance company says they will insure you but add language not to cover certain conditions, body parts, or activities.

A common exclusion related to use of anxiety depression or ADHD is “Mental/ Nervous Exclusion”.

Another example of exclusions is back problem or disk herniation can lead to lumbar spine exclusion, a cervical spine exclusion, or entire spine exclusion.

Exclusions can be written as permanent or reviewable after a certain amount of time. Any reviewable exclusion or qualified conditional rider can be appealed after certain a certain time period assuming improvement or stability in the health condition

Limitations or Modifications

A limitation on a policy is not the same as exclusion, as the company will modify your benefits. For example: due to some preexisting medical history, in spite of applying for a policy with benefits to age 65, the company may issue policy with limitations of a 10-year benefit period. This means in case of a long-term disability (which could be 25 years till you turn age 65) the maximum time the company will pay benefit for is 10 years.

During fellowship, a surgeon applies for a policy and the insurance company, based on their underwriting and the client’s medical history, issues the policy for the amount and the benefit period the applicant originally pursued (ex. $5000 in monthly benefit, to age 67).

However, the final policy has a restriction that zero additional future purchase options are available throughout the life of a policy. This surgeon has the potential to earn $350,000 or more post-fellowship, yet a significant portion of their income will be left unprotected, and they will have no potential within that disability contract to cover those future earnings. Any increases or additional coverage that surgeon wants to add later would require full medical underwriting.

Your Broker/Representative

So, how does the broker factor in? The broker has a dual responsibility — they need to serve you as their applicant/client and also need to operate with integrity when dealing with the insurance companies. Your broker needs to do a lot of things to keep your insurance application process (or policy service) moving along smoothly.

His Duties

Help to clarify or expand your answers pertaining to medical history and questions. Work with the underwriter of an insurance company and fight (advocate) for the very best and most robust offer that insurance company will write.

Ensure that you are applying with the insurance company that is best for you; remembering that each company has their own matrix for underwriting, policy features & benefits, as well as their own pricing models. The broker should be going into the process with all options “on the table”. They should be willing to move to another carrier if underwriting is indicating a negative approval. This is not to say that the original carrier should be “off the table”, but rather, to say that they need to be fighting for the best possible coverage for you.

Bob Bhayani MBA is a managing partner at www.drdisabilityquotes.com.

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