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Having long-term disability insurance (LTD) is vital to the breadwinner of your family. It protects your income if you can’t work due to an injury or illness. But did you know that not all disabilities are covered?
In this post, we explain policy exclusions, limitations, and conditions that may affect your disability claim.
What Are Disability Insurance Exclusions?
An exclusion clause is written into the contract of a disability insurance policy. It means that the insurance company will not cover any disabilities caused by the exclusion. By having exclusion clauses, the insurance company is clear on risks or events that it is not willing to cover.
Insurance companies are not out to deny legitimate claims. In fact, they take their obligation to policy owners and claimants very seriously. They will undertake to:
Provide a thorough, fair and objective evaluation of all claims,
Pay valid claims with a high degree of customer service, and
Assist claimants’ efforts to return to work, where appropriate.
That said, let’s look at some common disability insurance exclusions.
The most common exclusions on every disability insurance policy
Even policies offered by the best disability insurance companies have exclusions in them. You can find the following three exclusion clauses in the fine print of all long-term disability policies. The insurance company will not pay:
For a disability due to an act or accident of war, whether declared or undeclared,
For normal pregnancy or childbirth, but it will cover disabling complications of pregnancy or childbirth, or
During any period that you are incarcerated.
Exclusion clauses found on weaker long-term disability insurance policies
You may also come across LTD policies with more exclusions than the three above. Although these disability insurance policies cost less, fewer guarantees and more limitations may turn off many people. While you can find some of these other exclusions in group long-term disability, others are in private disability insurance coverage.
With these exclusions, the insurer denies an LTD claim when disability results either directly or indirectly from:
Self-inflicted injuries or a suicide attempt, whether you are sane or not,
You driving a motor vehicle while under the influence of drugs or with a blood alcohol level equal to or greater than 80 mg of alcohol per 100 ml of blood,
The illegal or illicit use of any drug, or the abusive or repeated use of alcohol or marijuana,
Your participation in a flight or attempted flight in any form of aircraft as a member of the crew,
Your participation in a race, competition or speed contest in a motor vehicle as an amateur or professional on approved raceways or elsewhere,
Treatments or care received for cosmetic purposes,
Your participation in one of the following activities: mountaineering, mountain climbing, speleology, parachuting, sky diving, hang gliding, bungee jumping or any race (including car, motorcycle, horse or motorized watercraft races);
Your participation in a sporting activity for which you are paid, or
One of the following disorders or from related treatment or complications, if you do not hold an occupation or are on maternity or parental leave: stress, anxiety, depression, neurosis, psychosis, adjustment disorder, fibromyalgia or any chronic pain syndrome, chronic fatigue syndrome, personality disorder, attention deficit disorder, any other emotional or psychiatric disorder.
Your disability insurance policy also won’t pay during the period where you:
Are being compensated for a leave of absence, as agreed to with your employer, or
Cease temporarily to work, as agreed to with their employer.
The worst policy exclusions and limitations for disability policies
Policy exclusions on the weakest LTD policies also limit or exclude claims arising from:
Degenerative disc disease,
Strains or sprains,
Anxiety, chronic fatigue syndrome, depression, chronic pain syndrome, stress or burnout,
Any disorder resulting from substance abuse or addiction, or
Any other psychiatric, psychological, emotional, behavioural or nervous disorder.
In some cases, LTD policies limit the disability benefits of the condition. For example, depending on the policy language, it may restrict the benefit period to 60 days per occurrence of a strain or sprain.
Because mental disorders and musculoskeletal issues like back and neck pain make up most disability claims, you’ll want to avoid LTD policies with these exclusions and limitations.
Exclusion clauses due to a pre-existing condition
How about pre-existing conditions? Do insurance companies pay an LTD claim for these? As defined, a pre-existing condition means a medical condition that existed when insurance coverage began.
As part of the application process, you must disclose any pre-existing conditions. The insurance company will review your medical history thoroughly. Then, it will determine if your pre-existing condition warrants an exclusion clause.
If so, the insurance company will apply a pre-existing condition exclusion to your disability insurance policy. This means it will deny claims from a disability caused by the pre-existing condition.
While a pre-existing condition exclusion will limit your ability to make a disability claim, it’s not all bad news. That’s because in some cases, you can remove the exclusion clause later. After the insurance company reviews your medical records—and is satisfied it doesn’t pose a significant disability risk—it will remove the pre-existing condition exclusion clause.
Pre-existing condition exclusion clause in group long-term disability
With many group policies provided by employers, there is a pre-existing condition exclusion clause for a disabling illness from a pre-existing condition within the first 12 months of coverage.
Some group policies define a pre-existing condition as an injury or illness that occurred within three months before the effective date of coverage.
Suppose a disability claim arises during the first 12 months of coverage. In that case, the insurance company will request your medical records for the relevant time period of three months before the effective date.
Fortunately, there aren’t any limitations or exclusions on disabilities that occur 12 months after the effective date of coverage.
Frequently Asked Questions
What is excluded from disability insurance?
Some common exclusions for disability coverage include normal pregnancies (complications are covered), acts of war, periods of incarceration, and pre-existing conditions.
While the first three are automatic, the last depends on your medical history. Many long-term disability policies also contain other exclusions like self-inflicted injuries, substance abuse, and mental disorders.
What are some common limitations on disability policies?
While exclusions mean the insurance company won’t pay any long-term disability benefits, limitations may only restrict LTD benefits. The most common limitation is to reduce the benefit period of a disabling condition.
For example, some disability insurance policies limit the claim for sprains and strains to 60 days per occurrence.
Can disability insurance be denied for pre-existing conditions?
Yes, an insurer can deny your claim for LTD benefits for disabilities caused by pre-existing conditions. A pre-existing condition is one that existed when you bought your disability insurance policy.
Have Questions About Disability Insurance Benefits?
Exclusions aren’t always black and white. As you can imagine, the assessment of any disability claim is complex. As a result, until the insurance company is presented with a claim and has a chance to review the facts, it cannot determine if an exclusion will apply.
If you believe the insurance company incorrectly applied an exclusion to deny your claim, speak with an experienced disability lawyer who can help fight for your disability benefits.
If you don’t have a private disability insurance plan and would like to discuss whether your pre-existing condition warrants an exclusion, reach out to us at info@briansoinsurance.com or 604-928-1628. We will provide a free consultation and help you get the best disability insurance policy.
Get Your Disability Insurance Quote Now
While we make every effort to keep our site updated, please be aware that timely information on this page, such as quote estimates, or pertinent details about companies, may only be accurate as of its last edit day. Brian So Insurance and its representatives do not give legal or tax advice. Please consult your own legal or tax adviser. This post is a brief summary for indicative purposes only. It does not include all terms, conditions, limitations, exclusions, and other provisions of the policies described, some of which may be material to the policy selection. Please refer to the actual policy documents for complete details which can be provided upon request. In case of any discrepancy, the language in the actual policy documents will prevail. A.M. Best financial strength ratings displayed are not a warranty of a company’s financial strength and ability to meet its obligations to policyholders.
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