History of alchohol, own occ-DI question

[dante]

Hello,

 

During residency I voluntarily received treatment for alcohol dependence in an inpatient setting. I entered a 5 year monitoring contract with our state physician health program and was prescribed a beta blocker during treatment for hypertension likely from acute withdrawl, but I am still taking it.

I am currently applying for own occ DI. I was hoping not to have to disclose the history but I am thinking that the prescription is discoverable, and therefore the treating physician and therefore the history.

What will disclosing this information do to my ability to get a policy? I assume I may have an exclusion for mental nervous, but what else? Am I incorrect about companies being able to discover this (I have no idea how they would unless I disclosed it myself)? Would my documentation of successful 5 years of monitoring help in regards to getting an exclusion removed?

 

Anyone with experience or thoughts on this situation please let me know.

 

[Zaphod]

I dont have particular experience with this exact subject but they do get your records it seems and I would expect they will find out and would likely then just be very upfront and try to figure out ahead of time.

[Scott at MD Financial Services]

Dante,

Yes you should disclose it IF there is a question that is asked that would trigger a disclosure.  If you don't disclose and they find it then you will be subject to potential rescission of the policy if post issued or probably decline if found during underwriting for non-disclosure.  If you are working with someone that really knows Disability and has good communication with the underwriters then 5 years out should not be a big issue.

If we can help further just let me know.

[MPMD]

Scott @ MD Financial Services wrote:

Dante,

Yes you should disclose it IF there is a question that is asked that would trigger a disclosure.  If you don’t disclose and they find it then you will be subject to potential rescission of the policy if post issued or probably decline if found during underwriting for non-disclosure.  If you are working with someone that really knows Disability and has good communication with the underwriters then 5 years out should not be a big issue.

If we can help further just let me know.

Click to expand...

How could you go through underwriting for DI and not have a question that would trigger?

I am not an expert on DI, but wouldn't you want to be fairly honest and forthcoming during underwriting? I mean if you pay up for 2 years and then file a claim I would imagine that many companies are going to invest at least a few hours work from an associate to trigger rescission.

 

[Scott at MD Financial Services]

Some carriers have time limits on things so you might find one that asks "in the last 5 years have you had XYZ".  If the situation was 5 years a 1 day then you can answer it No truthfully and it will hold up.

You are correct in that they will investigate so ALWAYS answer things truthfully as they are asked.  To further describe what I mean is if you had multiple speeding tickets 4-5 years ago going in excess of 100 in a 55-65 mph zones (real physician case here, claimed he had to get to the hospital each time) but the question is "have you had one in the last 3 years" then answer is No.  If you have had one 2 years, 11 months, and 28 days ago then answer it Yes.

A colleague of mine just had this happen a few months back, he wrote a contract in 2006 (11 years ago), physician said "No" to the drug rehab question, 2017 went back into rehab.  In his medical admission notes when he was asked by the rehab hospital is this your first time he said "No i was in rehab in 2004".  When the insurance company got the notes to justify the claim there was clear evidence that the client had not told the truth in 2006 during underwriting.  What happens at that point is the carrier goes back to the underwriting guidelines used at the time the policy was issued and determines if they would have issued the policy based on the facts now presented to decide how to proceed on paying the claim.  The carrier in this case promptly wrote a check for 100% of premiums paid (about $37,000 over 11 years) on this policy by the insured back to the client and rescinded the policy.

[Zaphod]

Scott @ MD Financial Services wrote:

Some carriers have time limits on things so you might find one that asks “in the last 5 years have you had XYZ”.  If the situation was 5 years a 1 day then you can answer it No truthfully and it will hold up.

You are correct in that they will investigate so ALWAYS answer things truthfully as they are asked.  To further describe what I mean is if you had multiple speeding tickets 4-5 years ago going in excess of 100 in a 55-65 mph zones (real physician case here, claimed he had to get to the hospital each time) but the question is “have you had one in the last 3 years” then answer is No.  If you have had one 2 years, 11 months, and 28 days ago then answer it Yes.

A colleague of mine just had this happen a few months back, he wrote a contract in 2006 (11 years ago), physician said “No” to the drug rehab question, 2017 went back into rehab.  In his medical admission notes when he was asked by the rehab hospital is this your first time he said “No i was in rehab in 2004”.  When the insurance company got the notes to justify the claim there was clear evidence that the client had not told the truth in 2006 during underwriting.  What happens at that point is the carrier goes back to the underwriting guidelines used at the time the policy was issued and determines if they would have issued the policy based on the facts now presented to decide how to proceed on paying the claim.  The carrier in this case promptly wrote a check for 100% of premiums paid (about $37,000 over 11 years) on this policy by the insured back to the client and rescinded the policy.

Click to expand...

At least he got those back.

[MPMD]

Seems like a tough call in situations like this where you have something in distant history that would probably disqualify you?

Without disclosing I'm not sure I would be all that wild about continuing to pay premiums and just hope the company doesn't cut my policy if I make a claim.

You could really end up over the barrel on this.

OP might want to consider really looking at group DI policies as a major part of his compensation no?

[Scott at MD Financial Services]

There really are not many 'distant' questions.  The majority of all questions will have time frames similar to "in the last 3 years have you had X" or in the last 5 years have you had Y".  Most of the time a question of "have you ever had" relates to issues concerning the heart, kidney, liver, brain, and lungs, essentially major organ function.

In the world of insurance there is a difference 'material mis-representation' and 'mis-statement of fact'.

A few examples would be:

"No I did not go to rehab for 3 months" when you had just gotten out less than 24 months prior to application.  If the underwriting guidelines say not to insure that person then the policy is rescinded.

My birthday is 12-1-1975 when the reality is it is 12-1-74, thus ending up in a lower premium than should have been paid.  According to the guidelines, the carrier would write that policy so they simply go back to the premium tables at the time of issue to determine if the client had been accurate about the date of birth how much benefit would the premium being paid actually bought?  That benefit amount is now the policy benefit.

Have you had any surgeries in the last 5 years and you did not mention the ankle surgery 4 years prior.  Based on the guidelines at the time of issue, the carrier would have called for an ankle exclusion then they will go back retroactively and place an exclusion. on it.

As for group coverage, don't kid yourself, you walk into a new employer they have a plan, you sign up and presto you have coverage!  Now that is not really the way it works, most of those contract actually have a 24 month clause that states "anything you have been treated for in the last 24 months is now a pre-existing condition that is not covered for the next 12-24 months (depends on the contract) so many people have a false sense of security because they did not read the policy.  In addition, always look at the "language of the policy not just the 1 page sales brochure" check into the waiting period (not just the day number), the full definition of disability, the fact they carrier or the group can change the policy language anytime they want, cancel it anytime they want, or change the premiums anytime they want.

My experience over the last 24 years in this business I have only seen 2 cases where a policy was rescinded, the one I wrote about above and another that 'forgot' to mention she had been diagnosed with breast cancer 4.5 months prior to applying for coverage then tried to file a claim 3-4 months later, post policy issue.  On the other side of it, we probably help file a claim for one thing or another every week for a client.  Don't get me wrong the insurance companies have to defend themselves against fraud all the time but most of the time but when there is a rescinded policy or adverse action on an individual policies there is a pretty clear path to deception.  Where you see it mostly is with group coverage's simply because most think they can go get a job, get covered then file a claim.

[Dumpster Fire]

Always err on the side of caution and always disclose any adverse material either on a DI or malpractice application.  You may always attach and addendum explaining the situation which will be viewed in a positive light.  Do not blame or be anything less than honest and humble.  Everyone has a past; non-disclosure not only may, but will lead to policy recession. Eventually this will become a total non-issue and you should be applauded for seeking help before and not after the situation became a bigger issue.

Lastly, it's your money,  always fill out your own application and do not leave it to your staff to complete and leave for you to sign.  If they leave something out or misrepresent, it's your signature that attests to the veracity of the application and not theirs. Same thing with paying your premiums.