In honor of disability insurance awareness month I wanted to post something about the experience of purchasing an individual disability insurance policy.
Step 1- Product Selection
Meet with insurance agent to determine appropriate product selection. Items that will effect what product is most appropriate for you are your income, income source, existing coverage, current health, health history, and occupation type. Your agent should explain various features of the product and do some basic field underwriting to make sure you are eligible for the product. The agent should then provide you with an illustration or quote you on the premium amount.
Step 2 – Application
The next step is to fill out the application. Payment with application may or may not be required depending on what insurance company you are using. Be sure to be transparent and truthful in your application! Not only is it dishonest but withholding information or lying can cause your claim to be denied if you were to need it. Once the application is complete and received by the insurance company the underwriting process will begin.
Step 3- Underwriting Process
Usually you will be answering health and job related questions from an insurance company representative. Depending on the amount of coverage applied for there may be additional underwriting requirements such as a statement of income from employer, extra blood or urine exams, additional health information, or a more detailed job description.
Step 4- Policy Issue
Once underwriting has completed and your application has been approved you will then be issued the policy. The agent usually delivers the policy to you via paper or electronically. If you have not paid with the application then the first premium will be due at the time of delivery. There is typically a ‘free look’ period (usually 30 days) once you receive your policy. This allows you to get a refund if you no longer want the policy.
Step 5- Review and Maintain
Even though you have purchased the policy it does not mean you should set it and forget it. You should review with your insurance professional at least annually to make sure the coverage is still adequate. Things like career changes, promotions, pay increases, and changes in your personal finances can make your coverage inadequate.
If you have any questions on your disability insurance coverage please give me a call today!