Declined for Disability Insurance? Common reasons why, and what to do

by L.A.S.
The most common reasons for being declined for a disability insurance policy are:
1. Age
2. Dangerous occupation (often this includes building trades like electrician or roofer)
3. Employee of the U.S. Government
4. Income (too low or too high)
5. Lack of U.S. citizenship or green card.
6. New business or occupation (lack of actuarial data)
7. Overall poor health
8. Overweight, occasionally severely underweight people may be denied also)
9. Work or travel in foreign countries.
10. Works out of one's home.
In addition, the fact of having a dangerous hobby can cost you any kind of life or health insurance. A hobby of flying a plane is most often cited in insurance courses.

Common Diseases or Conditions that Cause Denial of Disability or Long-term Care Policies:
1. Asthma
2. Arthritis
3. Alcoholism or Drug Abuse
4. Carpal Tunnel Syndrome
5. Cancer
6. Crohn's Disease
7. Diabetes
8. Epilepsy
9. Heart Attack
10. Hypertension, especially if you take multiple medications
11. Lupus
12. Mental Disorders
13. Multiple Sclerosis (BTW, Minnesota has a statistically high incidence of M.S., and so dread disease policies exclude it in the list of conditions covered by the policy)
14. Overweight
15. Respiratory Diseases such as emphysema
16. Sleep Apnea

What kinds of strategies or limitations might you have to accept in order to get any type of disability insurance?
1. An exclusion for conditions related to the reason for the denial. Example: exclude injuries related to on-the-job accident/injury if the reason for denial was that you are in a dangerous occupation. This would still cover you for off-duty injuries or illnesses.
2. A longer elimination period (the wait between an injury or illness and the time you may first draw benefits).
3. A shorter benefit period. Perhaps you only have six years between now and planned retirement at age 65; you could structure a policy to stop when you turn 65.

4. A smaller benefit. To me, this is the least satisfactory option because almost all disability insurances pay you a maximum of 65 percent of your regular income anyway. (And that is based on your base pay, not your paycheck with all overtime and bonuses included.) You may as well just stash away as much cash as possible for a rainy day.
5. OR all of the above.

But just because you have accepted an exclusion for your occupation does not mean that you can never collect on an on-the-job injury. You may be able to prove that an accident causing a broken back, for example, would have incapacitated even a person with a healthy back. So the fact that you declared a back problem when buying the policy may not affect the legitimacy of your claim.

This is just a few things to think about when considering buying disability insurance or finding some other strategy for replacing lost income when you are laid up -- or laid off.