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Is it hard to get disability insurance?

Let’s just say it isn’t easy.

Suppose you’ve finally found time to research disability insurance and you decide that an individual policy makes sense for you. Now what?

You’ll start by you sharing detailed, sometimes painfully private, information about your entire health history with a stranger.

As an aside, it is imperative that you pre-screen this health history with your insurance broker or financial planner before you disclose it to an insurance company (either via an online health questionnaire or phone interview).

Once the insurance company receives your information, you have officially opened the Pandora’s Box known as medical underwriting.

Look left. Look right. Two of you won’t be here.

Why does an insurance company want to know about your health history? After all, you probably didn’t have to disclose anything health related for your employer-provided long-term disability (LTD) benefits.

I don’t know if you can relate, but a scenario that many physicians can recall, is a particular undergraduate class when, during syllabus week, a cheeky professor instructed you to “Look left, then look right. Two of you won’t be here next week.”?

Disability insurance is a lot like that.

After you apply for a policy, and the insurance company has reviewed your complete health history, one of three things can happen next:

One – Congratulations! You are part of the minority (less than half)1 of physicians who apply for a policy and are approved by the insurance company without penalty.

Two – Congratulations! You are approved for a policy, but because of pre-existing history the insurance company has offered you a policy that is less comprehensive, or more expensive, than you were hoping for. Typically, you will be offered a policy with an exclusion rider, i.e., your back will not be covered for future disability because 3-years ago you had spasms and were prescribed a muscle relaxer.

Three – You receive a letter from the insurance company that starts out like this: Thank you for the recent application. After careful consideration, we must regretfully inform you that we cannot offer you a policy. This is called a decline and it happens about 15%1 of the time.

Isn’t there another way?!

Depending on the institution where you are training, you may be eligible for a special disability insurance option known as a Guaranteed Standard Issue (GSI) program.

As the name implies, GSI programs offer a safety-net that permits trainees to qualify for an individual policy, from a leading true own-occupation insurance company, with no pre-existing exclusions and no health history (or medication) information necessary, and no price penalty.

Once one company discovers your health history, they all do. And if you are approved for a policy, but with penalty, or if you are declined, then your eligibility for the GSI program is typically forfeited.

So, what’s the catch?

Remember how imperative it is that you pre-screen your health history with your insurance broker or financial planner before disclosing it to the insurance company?

The reason is: once one company discovers your health history, they all do. And if you are approved for a policy, but with penalty, or if you are declined, then your eligibility for the GSI program is typically forfeited.

If you apply for disability insurance, and you notice yourself answering “yes” to any of the health questions, it should cause pause. Before finishing the application questionnaire, online or by phone if you’ve gotten that far, you should make certain that no GSI program exists at

your current training institution or at a future institution (if you will continue your training somewhere else).

Because once the toothpaste is out of the tube, it isn’t going back in.

Working with an experienced professional.

GSI programs don’t exist everywhere, and they are typically exclusively managed by a local insurance broker who has proven experience working with trainees at your institution.

But what if you are no longer in training? Or what if there isn’t a GSI program available at your institution?

As noted above, if you are in medical school, transitional year, or residency, but you anticipate pursuing a fellowship, inquire with your future programs whether a GSI program exists there.

Of course, it is possible that you will never have access to a GSI program. If this is the case, and you are concerned that you may have difficulty qualifying for a policy, your best bet will be to find a disability insurance broker or financial planner who has experience working with trainees and can work, on your behalf, with multiple companies.

In summary, individual disability insurance isn’t as easy to qualify for as most would hope. Before disclosing your private health information to an insurance company, make sure you pre-screen the health questions up front. If you find yourself answering “yes”, think GSI.

Hurley Associates works with physicians who are concerned with starting their careers in balance: paying off yesterday, saving for tomorrow, while living a financially confident life today.

As the preferred disability insurance broker for some of the largest graduate medical education programs in America, Hurley Associates has been successful in helping physicians find peace-of-mind with protecting their income, in their medical specialty, and keeping within their budget.

Dan Sklenka is a CERTIFIED FINANCIAL PLANNER™ professional with Hurley Associates.

1 Beal and Khan, November 2021, 2021 Annual Survey of the U.S. Individual Disability Income Insurance Market, Milliman Report

Registered Representative and Financial Advisor of Park Avenue Securities LLC (PAS). OSJ: 244 Boulevard of the Allies; Pittsburgh, PA 15222. Phone: (412) 391-6700. Securities products and advisory services offered through PAS, member FINRA, SIPC. Financial Representative of The Guardian Life Insurance Company of America®(Guardian), New York, NY. PAS is a wholly owned subsidiary of Guardian. Hurley Associates is not an affiliate or subsidiary of PAS or Guardian and is not registered in any state or with the U.S. Securities and Exchange Commission as a Registered Investment Advisor.

By providing this content Park Avenue Securities, The Guardian Life Insurance Company of America®, and your financial representative are not undertaking to provide advice or make a recommendation for a specific individual or situation, or to otherwise act in a fiduciary capacity. CA Ins. License ID#: 0L77727. 2022-144970 Exp. 10/24