Is the thought of a lengthy underwriting process preventing your clients from securing the paycheck protection they need? It doesn’t have to. Although many disability insurance policies require financial and medical underwriting that may involve invasive questions and medical tests, simplified disability insurance provides an alternative path to coverage. There are some drawbacks, so it’s not ideal for everyone, but it can be perfect for four types of prospects.
What Is Simplified Disability Insurance?
Before diving into who needs simplified disability insurance, it’s helpful to understand exactly what it is.
Simplified disability insurance, or simplified issue disability insurance, is disability insurance that comes with a streamlined underwriting process. This type of coverage is available without medical exams, blood work or inspection reports. It doesn’t require financial documentation, either. Thanks to this simplified approach, policies can typically be issued within 30 days.
That sounds great, and it can be great for the right candidate, but there is a catch. Compared to individual disability insurance policies that require more intensive underwriting, simplified disability insurance may not provide as much coverage. Underwriting may be a hassle, but for many clients, it’s worth the effort. However, for the following four types of prospects, simplified disability insurance may be the best way to go.
1. Prospects with Pre-Existing Health Conditions
The National Cancer Institute says that approximately 40.5% of people will be diagnosed with cancer at some point in their lifetime. The CDC says that 9% of adults between the ages of 55 and 64 and 3.6% of adults between the ages of 45 and 54 have heart disease.
Many people are living with pre-existing health conditions. People who have experienced medical problems are often most likely to understand the importance of paycheck protection. Unfortunately, their medical history can lead to rejected disability insurance applications. If your clients have pre-existing medical conditions, simplified disability insurance may be the best way to secure coverage.
2. Prospects with High-Risk Activities
Some people engage in activities that may increase the chance of disability. Sometimes the activities are related to their work. According to CBS News, the deadliest occupations are in farming, forestry, fishing and hunting. Hobbies and recreational activities can also increase the chance of an injury, and people who are injured off the clock won’t have access to workers’ compensation.
3. Prospects with Complicated Income
Disability insurance underwriting isn’t solely focused on health issues. Underwriters also typically want financial documentation to support the amount of coverage being provided. This can be an easy requirement for employees who earn a regular salary, but it can be a headache for applicants with more complicated income situations. For example, individuals who earn variable commissions and self-employed individuals may have a harder time gathering the financial documents requested.
4. Prospects Who Refuse to Go Through Intensive Underwriting
This one’s tricky. If a prospect is likely to go through disability insurance underwriting without any problems, it’s probably in their best interest to do so. However, some people may be unwilling to go through with everything that’s required. Maybe they’re afraid of doctors and don’t want to get blood work done, or maybe they’re incredibly busy and just can’t make time for the process.
Some coverage is better than no coverage. Although these prospects could probably secure more robust coverage by going through the traditional underwriting process, if they aren’t willing to do so, simplified disability insurance at least provides an alternative way to secure some coverage.
What Are the Alternatives to Simplified Disability Insurance?
Simplified disability insurance may be the best option for the four prospects described above, but before offering it to a client, consider whether there’s a better solution.
- Individual disability insurance is typically the best way for an individual to secure robust, highly customizable, portable paycheck protection. Yes, it can require a lengthy underwriting process, but it provides a level of coverage that can’t be beat.
- Guaranteed standard issue disability insurance is a good option for groups of employees at the same company. Like standard issue disability insurance, guaranteed standard issue disability insurance has a streamlined underwriting process that’s great for people with pre-existing medical conditions. This option can also be more affordable thanks to multi-life disability insurance discounts.
Are you looking for simplified disability insurance for one of your clients? DIS can help. Request a quote.
