I'll admit it: I never thought about disability insurance until a few years ago. My jobs never offered access to a plan, and I didn't consider shopping for a policy on my own.
But once I learned about the risks of disability, I realized this coverage is a must-have for anyone who can afford the monthly premiums.
The odds of experiencing a long-term disability may be higher than you expect. One in four people may be out of work for a year or more due to illness, injury, or pregnancy, according to the Council for Disability Awareness.
To make matters worse, 51 million working Americans don't have disability coverage other than Social Security Disability Insurance, which can be difficult to qualify for.
For the average American, being out of work for any length of time could be a financial catastrophe — especially with a family to support. Once I understood the severity of these statistics, I was ready to protect my own income.
I started shopping for a group disability policy through a professional organization. The monthly premiums were much cheaper than an individual policy would be, so I was eager to submit an application.
I filled out the forms, sent my paperwork, and felt a sense of relief — until I received a painful rejection letter a couple of weeks later.
I didn't make it past the first couple of sentences before angry tears filled my eyes. The company rejected my disability insurance application because of my past history of depression. I felt betrayed, vulnerable, and shamed by their decision. The sting of being deemed "too risky" to insure for disability felt like the ultimate rejection.
After weeks of complaining by phone and email, I was finally able to get the insurance company to reverse their decision.
The underwriters needed proof I was no longer depressed from my healthcare providers, so my psychiatrist and therapist each sent a letter on my behalf. These letters confirmed my current mental health status and were enough for a reversal.
When you have recovered from a past mental illness — and you have proof from a healthcare provider — it can be easier to qualify for a disability insurance policy. But it may be more difficult with ongoing problems.
"If you have a chronic mental illness, disability insurance underwriters may see you as part of a high-risk class," says Alexandra Wilson, a certified financial planner at SmartPath in Atlanta.
She says depending on the company, you may get a rejection. Or you may receive a letter of acceptance with exclusions for your pre-existing condition. The company may offer limited coverage — or no limitations with higher premiums.
You may also see a limitation rider attached to your disability insurance policy. These riders — which may restrict coverage for mental health issues or substance abuse — could limit your benefit period to two years or less. Wilson says some states may require these riders for disability insurance underwriting.
To get around these potential roadblocks, Wilson suggests doing some research. Create a list of two or three companies known for working with folks with mental illness.
"Call and ask about their requirements and possible riders before applying," she recommends. If you're not sure where to begin, seek guidance from a financial planner or disability insurance broker.