Disability insurance provides protection of your ability to earn a living. That makes it one of the most important forms of insurance you can have. But there are provisions in disability policies that the average person isn’t familiar with. One of the most important is a disability insurance exclusion. They are the events that will specifically exclude or limit your ability to get benefits.
Let’s take a look at some of those exclusions, and what you can do about them.
Typical Disability Insurance Exclusions
Exclusions that you are likely to find in just about any disability insurance policy following:
Disability arising from…
- An act of war (declared or undeclared)
- An insurrection, rebellion, or taking part in a civil disturbance
- An intentional self-inflicted injury
- You taking part in the commission of a crime, or an attempt to commit a crime
- An auto accident that is the result of driving under the influence of alcohol or illicit drugs
The last three items on this list are self-explanatory, but the first two may require some interpretation. While you normally think of an act of war as meaning your induction into the military, terrorism has introduced a gray zone to the mix. If you are injured and disabled as a result of a terrorist act, you may need to get specific clarification to determine if this is a covered event.
The same is true in regard to the civil disturbance exclusion. It’s obviously meant to deny benefits to someone who actively participates in such acts. But what if you are the victim of an insurrection, rebellion or other civil disturbance?
Even if these exclusions are included in your policy, you should still get clarification as to exactly how you will be affected. Each insurance company may interpret these provisions in a slightly different way.
Two Year Maximum Benefit for Disability Caused by Mental or Nervous Conditions
Not all disability insurance policies contain this limitation, but it is fairly common nonetheless. But if your policy includes this exclusion, your benefit will be limited to not more than two years. It will not matter that the policy provides for permanent disability benefits in the event of disability that is a result of physical injury or illness.
Mental or nervous conditions can include depression, dementia, stress, anxiety, or any one of a long list of other conditions. Normally, the exclusion will contain specific language that will list out excluded conditions.
Disability Arising From Alcohol or Drug Abuse
While sustaining a disabling event as a result of driving under the influence of alcohol or illicit drugs is a typical exclusion, a policy may also your limit or exclude a disability claim if it is the result of either alcohol or drug abuse.
This could be a situation in which the claimant is unable to work due to a chronic addiction. This can include, but is not limited to, time spent in rehabilitation or undergoing therapy.
The exclusion generally restricts the payment of benefits arising from alcohol or drug use to not more than one year. Once again you will have to be very thorough in checking the exclusions included in your policy to see if this is the case.
This may not be a minor exclusion. For example, it could apply even if you or your family have no history of alcohol or illicit drug use or abuse. The source of drug addiction is increasingly coming from prescription medications, particularly painkillers. Addiction to these drugs could lead to a person becoming occupationally incapacitated. It can even set the stage for the eventual use of illicit drugs, particularly once access to the prescription medications are terminated.
Always Read Your Disability Insurance Policy Carefully
This is our standard advice when it comes to insurance policies of any type. You should carefully read every page and paragraph of the policy, and be fully prepared to discuss any questionable provisions with your insurance agent.
But you must pay particular attention to any exclusions that the policy lists. You must carefully weigh whether or not an exclusion is likely to affect you in a negative way. Some exclusions will not be negotiable, but where that is possible you should always make the attempt.
Understand however that the elimination of certain exclusions may result in a higher premium on your policy. Exclusions protect the insurance company; removing them increases the company’s risk. That will translate into a higher premium for you. But if it is a form of coverage that you think you may need, it may be worth a higher premium.
Choose Your Disability Insurance Policy Wisely
When it comes to disability insurance, or any other type of insurance coverage, it’s mission-critical that you choose your policy wisely. Everything that will or will not be covered by the policy will be spelled out upfront. That is the time to know exactly what it is you’re getting into, and to make any changes that you think will be necessary. Once the policy is in force, it will be too late to make changes.
And even more important, once a disabling event takes place, it will be too late to make changes to the policy. You’ll be bound by whatever limitations the policy includes.
For this reason, it’s important that you have a professional in your corner when purchasing disability insurance. This is a very highly specialized form of insurance, and you can end up with inadequate coverage if you don’t know the nuances of the industry. We can help you find the right policy for your needs, as well as explain any provisions that may seem to be at all confusing. Fill up the form below and let’s get to work on getting the right disability policy for you.
