Disability Insurance Exam: Double Duty For Life Insurance

Life insurance and disability insurance are two different types of insurance that can be purchased separately or together. While life insurance provides financial protection for your loved ones in the event of your death, disability insurance offers income replacement if you become injured or ill and are unable to work. The medical exam for disability insurance, which is similar to a physical exam, helps insurers understand your health and set your rates accordingly. Interestingly, the results of this exam can also be used when applying for life insurance, saving you time and effort in the process. This is particularly useful if you're considering combining disability and life insurance policies for comprehensive financial protection.

Disability insurance medical exams are similar to physicals and are used to set insurance rates

The disability insurance medical exam is part of the underwriting process, which helps insurers assess the risk of applicants and determine their policy premiums. By understanding an applicant's health status and potential risks, insurers can set competitive rates that reflect the likelihood of future insurance claims. People with fewer health issues will generally receive more favourable rates, as they are less likely to need to make a claim. The exam also helps identify any pre-existing conditions, which may result in higher rates or an exclusion, meaning the insurer won't pay benefits related to excluded conditions.

The disability insurance medical exam provides insurers with valuable information to set appropriate rates and manage their financial risk. It is in the insured person's interest to be honest and provide accurate information during the exam, as withholding information or failing to disclose medical conditions may result in higher premiums or issues with claims in the future.

The results of a disability insurance medical exam can also be reused when applying for life insurance, as long as it was conducted within the last six months. This can streamline the process of obtaining life insurance, as the insured won't need to undergo an additional medical exam.

You can get life insurance with a disability, but it may be more expensive

Living with a disability doesn't mean you can't get life insurance. In fact, denying someone life insurance solely because they have a disability may violate the Americans with Disabilities Act. However, you may have to pay a higher premium for your life insurance, depending on your circumstances.

Factors That Affect Your Insurance Eligibility and Rate

When evaluating your risk, insurance companies consider your life expectancy, which can be affected by health conditions. They also take into account your age, overall medical history, sex, lifestyle factors, occupation, and life insurance medical exam results.

Types of Life Insurance for Disabled People

There are two main types of life insurance: term and permanent. Term life insurance provides coverage for a predefined term, such as 10, 20, or 30 years. On the other hand, permanent life insurance offers a death benefit for the policyholder's entire life.

If you have a disability, you may find it challenging to get life insurance through these traditional routes. However, there are alternative options available:

• Simplified issue life insurance: These policies don't require a medical exam, but they typically have health-related questions in the application. They tend to be more expensive and provide less coverage than traditional policies.
• Guaranteed issue life insurance: These policies don't require a medical exam or any health-related questions. They are designed for older adults with limited financial resources and are usually the most expensive type of policy for the amount of coverage provided.
• Impaired risk life insurance: If you have a high-risk disability affecting your life expectancy, this type of policy is often recommended.

How to Get the Best Life Insurance as a Disabled Person

To get the most suitable life insurance for your needs, it's important to do your research. Learn about the different types of life insurance, including those that don't require a medical exam. Also, consider working with an experienced insurance agent who has expertise in serving clients with disabilities. They can help you navigate the process and find the best policy for your circumstances.

Paramedical exams are required for large insurance policies

When applying for a life insurance policy, the insurance company may request a paramedical exam. This is a brief screening device used by insurance companies to determine your eligibility for their life insurance policy. Paramedical exams are typically required if you are applying for a large amount of insurance. For example, if you are applying for more than $1 million of life insurance, or more than $10,000 per month of disability insurance, you will need to take a paramedical exam. If you are over 50, an insurance company may require an exam for lesser amounts.

Paramedical exams are usually carried out at your home or place of business, but they can also be done at a local facility. They are carried out by a paramedical examiner, who will measure your height and weight, blood pressure, and pulse, and sometimes administer a resting EKG. The examiner will also ask you questions about your medical history and require authorization to access your medical records.

The exam will include blood and urine tests, which will be used to identify any major health problems that might affect your health, longevity, and coverage eligibility. For example, high cholesterol levels can be indicators of future health problems, so life insurers may factor any issues identified into their underwriting process. The blood test will also be used to check for drug use, both prescription and recreational. Testing positive for illegal drugs will likely result in automatic disqualification from traditional life insurance.

You can add a disability rider to your life insurance policy

If you're looking for financial protection, you may want to consider adding a disability rider to your life insurance policy. This is an optional provision that can provide a financial safety net if you lose your income due to a disability. It's important to note that this comes at an added cost.

A disability income rider, or disability income benefit rider, is an add-on to your life insurance policy. It replaces a portion of your income if you become disabled and can no longer work. This typically continues until you reach retirement age or pass away, whichever comes first. The benefit is usually a percentage of the policy's face amount and is paid out monthly. For example, if your policy is worth $50,000 and the disability income benefit is set at one per cent, the rider would pay you $500 per month.

The rider is activated when you, the policyholder, meet the disability criteria specified in the policy. This often means that you're unable to work due to illness or injury, but the specific definition of disability can vary between policies. Some policies define disability in relation to your specific job, while others define it in terms of any job you may be qualified for.

There are several benefits to adding a disability income rider to your life insurance policy:

• Income replacement: It replaces a portion of your income if you become disabled, ensuring you still have money coming in.
• Cost savings: Adding a disability income rider to your life insurance policy may be more cost-effective than purchasing a separate standalone disability insurance policy.
• Premium waiver: Some disability income riders include a premium waiver, which means you don't have to pay premiums on your life insurance policy while you're receiving disability benefits.
• Flexibility: You can often tailor the rider to your needs, for example by adjusting the waiting period, benefit amount, or duration of benefits.
• Peace of mind: Knowing you have a financial safety net in place can reduce stress and allow you to focus on recovery.

However, there are also some potential drawbacks to consider:

• Additional cost: Adding a rider to your policy will increase your premium.
• Limited coverage: The benefit provided by the rider might not fully replace your income.
• Definition of disability: The specific definition of disability in the policy can be restrictive, and it may be challenging to claim benefits if the definition is too narrow.
• Waiting period: There is usually a waiting or elimination period before disability benefits begin, which could pose a financial challenge if you don't have other sources of income.
• Limited benefit period: Some riders only provide benefits for a limited time, such as two or five years.

When considering whether to add a disability rider to your life insurance policy, it's important to weigh the pros and cons and carefully review the terms and conditions. Consulting with a financial advisor or insurance professional can help you make an informed decision.

Life insurance medical exams are relatively quick and easy to get

The exam usually consists of two parts: a medical questionnaire and a physical examination. The medical questionnaire will ask about your medical history, including any medications you take, how often you take them, and their dosages. It will also cover your family medical history, recent hospitalizations, and any doctors you've seen recently.

The physical examination will typically include checking your height, weight, pulse, and blood pressure, as well as taking blood and urine samples. Depending on your age and the coverage amount, you might also undergo additional tests such as an electrocardiogram (EKG) or a treadmill stress test.

To prepare for the exam, it is recommended that you get a good night's rest, avoid caffeine and alcohol, and gather and review your medical records. Wearing short sleeves and lightweight clothing can also make the process more comfortable.

The results of the medical exam will play a significant role in determining your life insurance quote. It is important to take the test seriously and provide accurate information. The exam provider will ask for detailed health history information, so be prepared to answer questions about your diagnosis, treatment history, and current medications.

Overall, life insurance medical exams are designed to be quick and convenient for the applicant, while providing valuable information to the insurer for accurate pricing and coverage decisions.

Frequently asked questions