Any reason not to accept a disability policy with exclusions I don't like?

May 21, 2008 1:44 PM

Will accepting a disability insurance policy with pre-existing condition exclusions negatively impact my ability to get a policy without them later or have other negative effects?

I've been offered a disability policy, but it contains an exclusion for all mental health conditions because I underwent therapy for anxiety following 9/11 (I lived a few blocks away). They've said there's no way to remove the exclusion. If I take the policy, am I putting a blot on my permanent record (or is there already one)? In the short term, I don't see this exclusion in itself as being a problem, but I'm worried about the secondary effects of accepting a policy with such exclusions.

I can of course shop around for another policy, but in the meantime, I'd like to be covered, and would cancel later if I found better coverage. Will there be negative ramifications to accepting this policy in the meantime? If you require more info, send email to [e-mail].

posted by anonymous to Work & Money (2 answers total)

Most of my knowledge about these kinds of issues comes from the health insurance industry. There are similarities, but there are also undoubtedly specifics that I'm unaware of.

I lean toward the 'already a blot on your record' theory. Once one insurer has brought it up as an issue, any other insurer will know about it, or expect to be told. You could get better coverage elsewhere, but you might pay higher premiums for the privilege. Did you get this policy through an agent, or could you find an agent to talk to? They'd probably know best.

A group disability policy (employer- or state-sponsored, if available to you) might bypass this problem, but unlike health insurance, disability insurance coverage is not subject to HIPAA or COBRA. So once your affiliation with the group ends, your coverage evaporates.
posted by expialidocious at 9:30 PM on May 21, 2008

Expialidocious's answer sounds right to me. A group policy -- that is, coverage through an employer -- would make most of this moot. One caveat there is that almost all group products (it's standard in every LTD contract I've come across in the last ten years) have a mental/nervous exclusion. They'll pay for 24 months, but no longer. It usually reads something like this:

"If you are disable because of a mental disorder, your benefits will be limited to a total of 24 months while insured under the policy, unless you are confined as a resident inpatient in a hospital at the end of the 24-month period."

So, you're not giving up all that much by agreeing to a complete mental/nervous exclusion.

Presumably, the individual disability insurer knows about your mental health treatment because you answered a question honestly on an application. That's how the next potential insurer will find out about it, too.
posted by MarkAnd at 4:51 AM on May 22, 2008