Written By: Corey Janoff
The demographics of our clientele and the readers of this blog are primarily still in the early part of their career. Most of you are still pretty young – under the age of 40. If you’re over 40, don’t’ feel bad. Age is just a number. However, age is a number that you can use in your favor when applying for disability and life insurance. Or it could be a number that insurance companies can use against you. Health status is another important variable when it comes to qualifying for disability and life insurance. So if you are young and healthy, use age and health to your advantage and lock in some coverage before you think you need it.
I have written about insurance planning before and I will probably write about it again. I won’t go in-depth today on why you need disability or life insurance. It’s pretty simple. If you need to work because you need to earn income to support yourself, you need disability insurance. Because if you can’t work anymore, you’re screwed. If you have a family to support or plan to have a family in the future, you need life insurance. Because if you die without life insurance, your family will be screwed.
Recent Insurance Industry Changes
In the last year, we have noticed a bit of a shift in the insurance industry. Disability and life insurance companies are making it really easy for young, healthy individuals to qualify for coverage. They have reduced rates. Many disability companies are waiving health exams for people applying for $5,000 or less of monthly benefit, which includes doctors who are still in medical residency or fellowship. Some life insurance companies are no longer requiring a health history phone interview. They simply review the application and request any pertinent medical records. If you don’t have any red marks on your medical history and everything checks out, you can get approved at great rates in a matter of days. We have seen approvals for life and disability insurance in under a week in some cases.
This is super convenient for young and healthy individuals. It has never been easier or less expensive to quickly secure quality life and disability insurance. However, if you are a little older, or if you do have some noteworthy items in your medical history, it can be a long and scrutinizing process to get approved for coverage.
With companies waiving some of the initial requirements that used to be mandatory, they are getting more aggressive with medical records. Nowadays, it’s almost automatic that insurance companies will request to review medical records for applicants. If you have been to the doctor in the last decade for anything more than a completely normal routine checkup, odds are, medical records are getting requested. Even if all you have had is a normal routine checkup, they may still request those records (I don’t know why).
When the insurance companies review medical records, they are looking for anything they can find to ding you.
You are a perfectly healthy emergency room doctor who alternates between day and night shifts, so you have a prescription for Ambien that you take sparingly when you can’t sleep?You probably aren’t getting the top rates for life insurance and you will likely have an exclusion for mental health related claims on a disability insurance policy. An exclusion means they won’t pay for claims relating to that ailment.
You had a benign mole removed from your back recently? In the insurance companies’ eyes, you’re at an increased risk for getting skin cancer. A life insurance company might charge you more and a disability insurance company will probably put an exclusion for skin cancer and possibly limit other policy benefits.
You sought therapy a few years ago because you lost a loved one or went through a divorce? You’re now at an increased risk of mental health related claims and the insurance companies are going to dock you for that.
I know people who went to see the doctor because they were feeling some abnormal symptoms in their chest.The doctor ran the customary tests. Everything checked out fine. Probably just heartburn. So the doctor sent the patient on their way and gave them a referral to a cardiologist who specializes in said symptoms in case the patient wants further evaluation. The patient never went to see the cardiologist, because the symptoms went away.
Well, guess what? The referral to the cardiologist is in the medical records. If you apply for life or disability insurance, the insurance company will want to see records from the cardiologist. However, those records don’t exist. The insurance company sees this as an untied loose end and cannot offer coverage in this scenario. They either want the patient to schedule a visit with the cardiologist so they can review the records from that visit. Or, they want the patient to get a detailed letter from the original doctor, explaining why the visit to the cardiologist is no longer necessary. Only then will they be willing to potentially offer coverage.
Does this seem unfair? Yes. Absolutely. Life is unfair. These are all real examples I have personally seen play out. I have plenty more if you want to hear about them. So before anything gets added to your medical history, you would be wise to secure disability and life insurance.
You never know when you might incur an injury or an illness. I know plenty of young, healthy people who have been diagnosed with cancer, brain tumors, etc. I know people who have been injured in car accidents, or fallen off ladders while hanging up Christmas lights or trimming tree branches in their yard. Life has a way of sneaking up on you sometimes.
I know women who have said they will wait to get life insurance until they are ready to start a family. And then they get pregnant sooner than they planned, have some complications with the pregnancy, which made it more difficult and/or more expensive to get life insurance. Also, if you are currently pregnant when you apply for disability insurance, it is an automatic exclusion for claims relating to pregnancy, delivery, or complications thereof. If you secure disability insurance before you get pregnant, you will be fully covered for any claims that result from the pregnancy or delivery.
If you are like some of the unfortunate individuals mentioned today and you have some notes in your medical history, there is still hope. Most people can still qualify for coverage, even with a lengthy medical file.The rates may not be the same as an Olympic athlete, but they may not be too bad.
It’s all about probabilities for the insurance companies. They have data on people with every type of health condition. They can pretty accurately determine the odds of a particular individual collecting benefits. If they can price it appropriately, they can offer you coverage.The lower the probability of a claim, the less they charge. The greater the probability, the more they charge.
Use Age and Health to Your Advantage
Again, if you rely on your income, you need disability insurance. If you have a family to support or plan on having a family in the future, you need life insurance. It is in your best interest to use your age and health to your advantage and secure coverage as soon as possible.
The rates will likely never be lower than they are now for you. Purchasing disability and life insurance gets more expensive the older you are. But you can lock in a level premium policy, so the rates never change over time. Also, the healthier you are, the lower the cost will be. Rarely do people get younger and healthier over time. So use your age and health to your advantage and lock in some coverage now if you don’t already have it.
If you need guidance on where to start your search, or what insurance companies to look at, get in touch with us at firstname.lastname@example.org.