Disability Income Insurance: What Everyone Needs To Know Before Buying An Individual Disability Policy
Friday, November 14th, 2008
Have you taken steps to protect yourself in case of a sudden disability that prevents you from working? The right disability income policy can help you keep your household going if you suffer a disability. Before you go shopping for a DI policy, you need to know what features to look for in a high quality policy–and the language the insurance industry uses to describe them.
• Non-cancellable: To avoid the possibility of losing your coverage just when you need it most, choose a policy that’s non-cancellable and guaranteed renewable to age 65–with premiums also guaranteed until age 65. With group (employer sponsored) or association group coverage, you run the risk of being dropped and left unprotected at a time in your life when, due to your age or to a change in your health, it would be very difficult to qualify for coverage from another provider.
• Conditionally renewable for life: Although premiums may increase after age 65, your policy should be guaranteed renewable for life, as long as you are at work full time.
• “Own-occupation”: This coverage defines “totally disabled”–and therefore eligible for benefits–as being unable to perform the material and substantial duties of your own occupation even if you are working in a different occupation. As a highly skilled professional (a doctor for example), who has invested so much in education and training, you want to ensure you have genuine own-occupation coverage…so that for example, even if you can teach in your field–but cannot practice in your medical specialty–benefits are still paid.
• Residual Disability coverage: Through a rider, a good individual DI plan can provide you with protection against the income loss you may suffer as a result of partial (residual) disability–even if you have never suffered a period of total disability.
A choice of “Riders”: Riders offer optional additional coverage such as annual Future Increase Options, Automatic Increase and Cost of Living Adjustments.