In our last post we discussed why you should not rely solely on your agent’s representations when purchasing a new disability policy. It is similarly important that you not rely solely on your agent to complete the policy application.
While an agent may offer to help you by filling out the application, this could end up negatively impacting a future claim or even voiding your policy down the road, if the application contains any errors or omissions. As explained in our prior posts, while it may seem like telephone interviewers, licensed representatives, agents, and medical examiners have significant control over the application process and whether you receive a policy, many applications have language that explicitly limits your ability to rely upon representations made by such individuals, and expressly places the burden of reviewing the application for accuracy upon you (regardless of who completed the application). Below is a sample of policy language:
Thus, you may speak with several people during the application process, and give them the requested information, but it is ultimately up to you to make sure the information provided to the insurance company is correct. It is therefore very important that you read through your application carefully to make sure it is complete and accurate before signing.
It is also very important that you carefully review your policy when you receive it from the insurance company, and not just file it away without a second thought. When you receive your copy of the full policy, it will typically contain language stating that you have a certain time period (e.g. 10 or 30 days) to review the policy and return it to be voided if it does not contain the terms you expected. This clause will normally be found on the first page of the policy, and typically looks something like this:
If you decide to keep your policy and do not send it back within this review period, you are bound by all provisions of the policy, regardless of whether you are actually aware of them or not. For instance, if you asked your agent for a certain provision and/or requested it on your application, but the insurance company omits it for some reason, and you don’t catch it during this review period, you may end up paying years of premiums for coverage that is different than what you thought you had purchased. Similarly, if your policy contains an unfavorable provision that you didn’t know was going to be in the policy, you will still be bound by it unless you return the policy.
Reading through contracts, especially lengthy insurance ones, can be time consuming. Many policies contain confusing language, terms of art, and often include supplemental riders that change the terms or definitions contained in the main body of the policy. But if you don’t read your policy until it’s time for you to file a claim, you may be caught off-guard by what your policy actually says. This next series of posts will discuss the importance of taking the time to read through your policy, and will review some things to watch out for when you buy a disability insurance policy.
Dentists and physicians are often swamped with work, and rely heavily on insurance agents when selecting and purchasing a policy. One scenario we commonly see is doctors requesting a policy that is “the same” policy that the other doctors in the practice have. Another common scenario is the doctor who wants more coverage and just asks his or her agent for another policy that is “like” his or her existing policy, or has the “same coverage” as his or her existing policy. What they don’t realize is that some of the same favorable terms may no longer be available in today’s policies. For example, while most older policies contained “true own occupation” provisions, there are now several different variations of “own occupation” provisions, so if you just ask for an “own occupation” policy, you may not actually be receiving the coverage that you think you are.
It is also important to be aware that, over the years, insurers have sought to distance themselves from agents and now often go so far as to include clauses or statements in their policies and applications that state no agent or broker has the authority to determine insurability or make, change, or discharge any contract requirement. Here’s an example of this type of policy language:
So what does this mean? It means that, while solely relying upon an agent’s assurance of the terms of a policy may have been a more acceptable (but not advisable) option in the past (when policies were often similar and generally favorable to policyholders), you can no longer solely rely upon your agent’s description of the policy. No matter how well-meaning or knowledgeable your agent may seem, ultimately, you are going to be on the hook if your policy doesn’t say what you thought it said, so it is crucial that you carefully review your disability policy to ensure you are receiving sufficient coverage.
Our next post will discuss the importance of the application process and policy review period.