Disability Insurance for Reservists | White Coat Investor

[Editor’s Note: Today’s guest post is written by D.K. Unger with DI4MDS. DI4MDS  is an advertiser on the site and has contributed posts on the topic of disability insurance for active-duty military in the past.]

Reservists who require an income to achieve their financial goals have the same need for disability insurance until retirement. All reservists can apply for an own occupation individual disability insurance policy from the “Big 6” physician disability insurance companies, and there is no extra premium charge for being a reservist. Reservists are also eligible for the same premium discounts as non-reservists. Premium rates will depend on age at the time of policy issue, state of residence, medical specialty/occupation, discounts, and plan design.

 

Active Duty Policy Suspensions

However, it is important to note that there are policy differences regarding coverage for reservist-related duties (training activities for example) and whether policy suspension is required in the event a reservist is called to active duty in the future. When a policy is suspended it means that no premiums are required to be paid and coverage is not provided for any disability that occurs or first manifests while the policy is suspended. When a policy is resumed after suspension, the premium and provisions will remain the same as they were before policy suspension. After suspension, the policy will not pay for any disabilities that occurred or first manifested during policy suspension.

 

Big 6 Reservist and Active Duty Related Policy Provisions 

Guardian

Guardian will not pay benefits for any disability “caused by, contributed to by, or which results from, declared or undeclared war or acts of war; or caused by, contributed to by, or which results from, active duty in the armed forces of any nation or international governmental authority or while serving in units auxiliary thereto or the National Guardian or similar government organizations”.

Policy Suspension Requirement for Active Duty – NO (in most states)

If you enter active duty service, you may request that the policy be suspended. The date of suspension will be the date Guardian or an authorized agent receives your written request or on a later date if requested. Active duty does not include training that lasts 90 days or less, or any period of travel preceding a period of active duty. Within 90 days after the date active duty ends, the policy can be placed back in force without evidence of insurability (underwriting). If the policy isn’t resumed within 90 days of the date active duty ends, the policy terminates and would require underwriting to be reinstated.

Principal

Principal will not pay benefits for any disability resulting from “active military service during a military action or conflict”.

Policy Suspension Requirement for Active Duty – YES

The policy will be suspended while you are on full-time active duty. Active duty does not include training by reservists that lasts 90 days or less. The policy can be placed back in force without proof of good health (underwriting) if active duty ends within 5 years from the date of policy suspension. The request must be made within 180 days following the date active duty ends. If the policy has been suspended for more than 5 years, the policy must be reinstated with underwriting.

Standard

Standard will not pay benefits for any disability “caused or contributed to by war, declared or undeclared, or any act or incident of war, or which resulted from military training, military action or military conflict while you are on active duty in the military service”.

Policy Suspension Requirement for Active Duty – NO

The policy can be continued while on full-time active duty, or you may choose to suspend the policy. You cannot suspend the policy during active military training lasting 90 days or less. The policy can be resumed if your active duty ends within 5 years from the date of suspension. The policy will terminate if not resumed within 5 years from the start of suspension. If terminated, the policy can be reinstated but underwriting would be required.

MassMutual

MassMutual will not pay benefits for any disability “sustained during declared war or undeclared war or act of war”.

Policy Suspension Requirement for Active Duty – NO

The policy can be continued while on active duty, or you can choose to suspend the policy. Policy suspension does not apply to active duty for training which is scheduled to last 90 days or less. If you are released from active duty within 5 years from the date active duty started, then the policy can be resumed without proof of insurability (underwriting). If not resumed within 5 years from the date of suspension, the policy terminates and must be reinstated with underwriting.

Ameritas

Ameritas will not pay benefits for a disability “caused or contributed to by war, declared or undeclared, or any act or incident of war, or as a result of military service when scheduled active duty is more than three months”.

Policy Suspension Requirement for Active Duty – NO

The policy can be continued while on active duty, or you can choose to suspend the policy if you are on active duty for more than 30 days. Within 90 days after active duty ends, the policy can be resumed without proof of insurability. If it is not resumed within 90 days after active duty ends, then the policy can be reinstated, which requires underwriting.

Ohio National

Ohio National will not pay benefits for any disability “caused by, contributed to, related to or that results from war or an act of war, or an incident of war, whether civil or among nations, declared or undeclared, while you are serving in the active or reserve military service, a military auxiliary unit, or in any civilian, governmental or non-combatant unit working for or serving military forces; or active military service when scheduled active duty is more than 30 consecutive days”.

Policy Suspension Requirement for Active Duty – NO

The policy can be continued while on active duty, or you can choose to suspend the policy. Within 90 days after active duty ends, the policy can be resumed without proof of insurability. If it is not resumed within 90 days after active duty ends, then the policy terminates and can be reinstated which requires underwriting.

 

[Editor’s Note: This post is great in that it explains your options for what to do when you go active. What it does not do, however, is tell you what to do with those options. My opinion is that you should not suspend your policy. I did not suspend mine. My reasoning what that there are many ways one can become disabled, and for a military physician, most of those have little to do with acts of war. “As a result of military service” is a lot more broad, but even so it would be hard to blame a cancer diagnosis or a car wreck here in the states as “a result of military service”. I think I made the right call and I’d do it again. I think most people who look at the issue objectively would agree. Think of acts of war and military service as an exclusion just like the rock climbing exclusion my policy had. It wouldn’t have paid out if I had been disabled rock climbing, but I was far more likely to become disabled from something else.]

 

Did you choose to suspend disability insurance while on active duty? What were the pros and cons of your decision? Comment below!

 

The policy provisions reviewed in this post are taken from the commonly issued fully underwritten individual policies. Policy provisions vary based on state and policy issued. This post is not intended to be an exhaustive review of all policy provisions or a recommendation for a specific policy or insurance company. Please review the full policy issued in your state of residence before making a purchasing decision.