Having disability insurance is one of the best ways that physicians can protect their future income. Disability insurance can pay most of your income if you become too ill or injured to work.
You can use the insurance money to pay for your mortgage, medical bills, utilities, car payments, other financial obligations and investments or retirement.
As with life insurance, it’s a considerable measure of protection. But a disability insurance policy is only worth it if it pays you benefits when you need them. And not all policies do.
Physicians who rely on policies with post-claim underwriting often find that they are unable to collect the benefits they thought they were entitled to receive.
If you’re ready to learn what it’s all about, keep reading.
Here is our guide to physicians’ disability insurance: post-claim underwriting explained.
To understand what post-claim underwriting is, it’s essential to understand what underwriting is in general.
When a policy is underwritten before you get ill or injured, filing a claim and collecting your benefits are rather straightforward steps in the process.
But post-claim underwriting works a bit differently, and it tends to make the process of filing and collecting claims quite a bit more complicated.
Your risk is not assessed until after you file a claim with a policy that requires post-claim underwriting. Depending on the plan and the insurance provider, post-claim policies often make it challenging to collect your benefits at all.
Post-claim underwriting is commonplace in many group disability insurance policies. With a group disability policy (typically provided alongside your health insurance as part of an employer’s benefits package), everyone in the group has the same policy.
In large hospital groups and healthcare networks, hundreds or even thousands of employees may belong to the same group plan.
Whether or not your employer offers group disability insurance, we always recommend that physicians get their own individual disability insurance coverage.
And that’s not just because of the pitfalls of post-claim underwriting; that’s also because individual insurance provides more significant benefits.
Another plus to having an individual policy: You can keep the same plan for a lifetime, regardless of your employer.
Group plans have limitations and only provide certain types of coverage under certain circumstances.
Individual policies offer much greater flexibility and allow you to customize a plan that’s right for you. Individual plans are also risk-assessed before you start paying monthly premiums or file a claim so that you know for sure what is covered.
Before submitting an insurance application and joining a group plan, be sure to read the policy thoroughly, so you know what the underwriting process entails.
There are many downsides to a policy with post-claim underwriting, the worst possible scenario being that you will be unable to collect your benefits when you need them most.
If you do decide to join a group disability insurance plan, you must pay extremely close attention to the application process.
When post-claim underwriting takes place, the insurer will look back at your initial application. Any inconsistencies, errors, or mistakes on your application can cause the insurance provider to deny your claim.
The claims approval process takes time, regardless of what type of policy you have or who your insurer is. But with post-claim underwriting, you can expect the process to take even longer.
For starters, you’ll need to undergo a medical exam. You’ll need to provide documents, medical records, and proof of your injury or disability.
You’ll also undergo a medical review by a physician chosen by the insurance provider. These physicians work closely with the insurance companies, and usually have the insurance companies’ best interests in mind.
So why do insurance providers do post-claims underwriting?
To save themselves money, of course.
It is not cost-effective for an insurance company to underwrite a specific policy for every individual policyholder in a group plan. The more policyholders in one plan, the less likely they are to do so.
This is partly because group plans have reduced rates. Why? Because the insurance company is banking on the idea that most members of the group plan will never even file a claim.
It costs them a lot less to skip this step when a policy goes into effect and only spend the time and money to underwrite a policy if, and when, you decide to file a claim.
Individual disability insurance plans almost always require that you have a medical evaluation or medical assessment beforehand. Expect to have to submit your health history along with your application at the very least.
This is a way for insurance companies to learn about all of your pre-existing conditions. It also makes it easier to collect benefits if and when you become ill or disabled (whether your injury results from a pre-existing condition or not).
Another way for insurance companies to save money is to deny claims. The practice of post-claim underwriting gives them a few creative ways to do this.
Since group policies use post-claim underwriting, you’ll need to undergo a medical evaluation after you file your claim. Having pre-existing medical conditions can complicate that process.
While your insurance company decides if your pre-existing condition is the cause of your disability, you can expect your claim approval to incur some delays.
Pre-existing health conditions can also be used as a way to deny your claim altogether. You can be sure that if your insurance provider has reason to believe that your disability claim is due to a pre-existing condition, they’ll do whatever they can to deny your claim, some have even acted in bad faith.
Failure to disclose pre-existing conditions at the time of application, they can use this as a way to deny your claim and rescind your policy altogether.
If you rely on disability coverage through your employer and switch jobs, you’ll have to change your coverage to a new group plan. And every time you do that, the clock on your pre-existing conditions resets.
Here’s why this is important:
Let’s say you take out an individual policy (and have pre-existing conditions) in your 30s. Then, you file a disability insurance claim when you’re in your 50s. Your insurance company will be well aware of those conditions and base your policy and benefits on the medical history you had at the time you initiated the policy.
In our experience, most of the exclusions from pre-existing conditions can be reconsidered and taken off of the policy after a period of one or up to five years after the policy has been issued if the condition has recovered.”
Changing jobs (and changing group plans) means that you’ll likely have more and more pre-existing conditions as you advance in age.
So if you join a new group plan in your late 40s and file your first claim in your late 50s, your insurance company will look at the pre-existing conditions you had before initiating the policy. The more pre-existing conditions you have, the more difficult it can be to collect your benefits.
Disability insurance benefits are usually calculated as a percentage of your income. For this reason, physicians earning upwards of $200,000 per year stand to collect significantly more each month than someone who only makes $75,000 per year.
And since insurance companies like to make money, physicians with high monthly benefit payouts often feel that they are targets for denial when they file a claim.
As a physician, there are some ways to protect yourself before you file a claim and some things that you can do if the post-claim underwriting doesn’t go your way.
Every disability insurance policy defines disability one way. This definition is the standard that you need to meet to be eligible to receive benefits.
For physicians, the only definition that’s worth paying for is true own-occupation. With this definition, you can receive benefits as long as you are unable to do some, part, or all of the work in your current job and current specialty.
This is crucial for physicians, as some disabilities will render you unable to do your specific job but leave you able to do all sorts of other work.
Under this definition, even a slight injury can make you eligible for monthly insurance payouts. Under other definitions, insurance companies can quickly rescind your claim by saying that you can still do a portion of your job or do another job.
If you see any other definition in your policy, there’s a good chance you’ll never be able to meet the standard needed to file a claim.
Without the true own-occupation definition of disability, you can kiss your full monthly benefits goodbye. If your policy doesn’t include this language, it won’t matter if the underwriting process takes place pre-policy, post-claim, or at any other point along the way.
We hate to use the word “spies,” but insurance companies are notorious for having people “monitor” the behaviors of policyholders who file a claim.
Filing a claim for disability insurance when you’re not injured is insurance fraud. But some of your actions and behaviors can be used against you, even if you are 100% being truthful about your illness, injury, and inability to do your job.
Be conscious of what you post on social media once you’ve become injured. Even the slightest appearance of impropriety can cause an insurance company to deny (or at least delay) your claim.
Before filing a claim, be sure to gather all of your evidence regarding your medical history. Ask your doctors to provide copies of all medical records, evaluations, and physicians’ notes from each health care visit.
The more evidence you have detailing your health status, medical history, and disability, the better chance you have of boosting your insurance claim.
Your insurance company will want to collect quite a bit of personal information to begin the post-claim underwriting process. Provide them with everything they ask for, like your medical records, and keep copies for yourself.
Omitting or failing to provide any of the requested information during the application process will delay your claim further.
If you’re worried that your insurance provider underwriters are gearing towards a rescission of your insurance contract, consult with an attorney. Consulting with a law firm that specializes in disability insurance before submitting a claim can put you in the best position to collect your benefits.
If you file your claim on your own and get denied, seek legal counsel before proceeding with the appeals process, especially if you suspect a denial was made in bad faith.
Insurance companies strive to pay only what they are contracted for and nothing more. Those with post-claim underwriting processes have a knack for finding ways to do so.
To better protect yourself, seek individual disability insurance coverage underwritten at the start of the policy.
Here are the key benefits to an underwritten individual policy:
If your employer offers a group disability plan alongside the health insurance package, do your research and analyze the policy. Relying on a group policy with post-claim underwriting is a mistake. After all, there’s no point in having disability income insurance if you can’t collect benefits when you need them.
Ready to customize a disability insurance policy that will protect your income and assets for decades to come?
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