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Medical Exclusion Riders – What are They and How to Avoid Them

Often when we present policy offers that contain medical exclusions to physicians, they are frustrated and consider looking elsewhere for coverage. However, it is likely, if a reason for an exclusion is found by one carrier, others will find it in your medical history as well. Medical exclusions don’t have to be showstoppers, though. Learn how disability insurance can still work for you, even with exclusions.

It All Comes Back to the Fine Print

We recently heard from a client who had purchased disability insurance three years ago. At that time, Dr. Jensen, who had just finished her medical residency, was scheduled to undergo minor back surgery to treat chronic back pain; so the insurer added a medical exclusion for her spine with a provision that it would re-evaluate her condition after three years. While this may have seemed that it was limiting her coverage, the spine exclusion actually stated:

Any injury, disease or disorder of the Spine except fractures, burns, lacerations, infections or neoplasms,

So, in essence, she was still covered for spinal injuries, just not the organic conditions, such as what she had, that can lead to chronic back pain. In fact, the exclusion, which is designed to protect the insurer, made it possible for Dr. Jensen to obtain disability coverage without incurring excessive premium costs or being denied coverage.

How Medical Exclusion Riders Work

Medical exclusion riders work to the benefit of both the insurer and the insured because it allows individuals with pre-existing conditions to get coverage and it decreases the risk to the insurer, which keeps premium costs down.

Insurers thoroughly review your medical history to determine if any condition exists, or existed, that increases your risk of disability. The higher the risk that a claim will be filed, then, the greater the likelihood your coverage will be denied; however, they will consider medical riders which will limit or exclude these conditions in their coverage.

As with the case of Dr. Jensen, many types of conditions can be re-evaluated to determine if they still present the same amount of risk, which can result in the removal of the exclusion. This usually requires that enough time has passed to be able to determine the chances of reoccurrence. For her evaluation, Dr. Jensen was required to undergo new medical underwriting. The risk that she faces is, even if her spine is deemed to be good as new, if some other medical condition is uncovered, such as elevated blood glucose levels, the insurer could apply a new medical exclusion – this one not so easily removed.

How to Avoid Medical Exclusion Riders

The ideal time to purchase disability insurance is when you are young and healthy. Aside from the fact that your premium costs will never be cheaper, each day you wait, you risk developing some type of medical condition which can make it more expensive, or even preclude you from being able to purchase it.

In many cases, medical exclusion riders are unavoidable; however, if you think you don’t have any health issues that could trigger one, there are a couple of things you can do to ensure that it doesn’t happen:

Postpone Getting a Medical Exam

Part of the normal underwriting process is for the insurance company to request medical records from any physician you’ve seen in the last five years. If just prior to applying for coverage you go out and have a bunch of diagnostic tests performed, it increases the likelihood of the insurance company finding something to use against you. This is not to suggest that you put off needed medical treatment or try to hide a known medical condition from the insurance company; however, you should consider postponing routine physicals or diagnostics until after your policy is approved.

Stay Healthy

If you have no known medical conditions, you will likely pass your medical exam with flying colors; however, there are certain things you should do to ensure nothing develops between now and the time you apply for coverage. Eat healthy, exercise, reduce your alcohol intake, get plenty of sleep – are the rudiments of good health that can keep many medical conditions away. However, the most important thing you can do is to avoid situations that can lead to injury, such as sports, heavy exercise, and rough house play with your son or nephew.
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