Examine how the policy defines a disability.
Ask for outlines of coverage so you can compare several policies.
Make sure you fully understand the policy.
A policy that does not provide the protection you need is not a good buy. Features to look for include:
- Clear definitions of disability (own occupation vs. any occupation)
Amount of benefits
Elimination period (the waiting period before benefits begin)
Benefits for partial disability
Provisions for replacement of lost income
Recurrent (relapse) provisions
Cost-of-living adjustments (or the right to purchase additional coverage)
Mental health/substance abuse provisions
Noncancellable or guaranteed renewable options
Exclusions of limits on coverage
Check that the company and agent are licensed in your state. If you have concerns, contact your state insurance department. The National Association of Insurance Commissioners, an organization of insurance regulators from each state, can be found online at www.naic.org.
Look for a company that is reputable and financially strong. Several services rate the financial strength of companies. You can get rating information from your agent, online, or from public or business libraries. Ratings on websites are usually free, but there may be a charge for ratings provided by phone. Rating agencies include:
A.M. Best Company
Standard & Poor’s Insurance Rating Services
Duff & Phelps Inc.
Moody’s Investor Services
Fill out your application accurately. Answer questions about your medical history and health completely and truthfully. If you are dishonest, the company may be able to cancel your coverage.
Read your policy carefully to make sure it offers the coverage you need. For instance, some policies pay benefits only if you are disabled due to an accident, not an illness.
Check the date that the insurance becomes effective.
Make your check payable to the insurance company, not the agent, and get a receipt. Do not pay in cash.
Review your policy. You may have a “free-look” period (usually 10 days after you receive the policy) when you can change your mind. If you review your policy during the free-look period and decide not to keep it, the company will cancel the policy and give you a full refund.
Contact the customer service office of your insurance company if you have a complaint about your insurance agent or company. If you are still dissatisfied, contact your state insurance department.