Features to Look for
Occupation Period – The length of time you are protected for your specific occupation and will continue to receive benefits, not requiring you to work in any other job or occupation. Typically 2 or 5 years, or to age 65 or to age 67. Most people prefer coverage to their normal retirement age.
Noncancellable – A noncancellable policy is the “cream of the crop”. It ensures that your premiums will never increase. Although rate increases are rare, because they involve your state’s approval, a noncancellable policy eliminates any future worries of rate increases.
Guaranteed renewable –Unlike a noncancellable policy, a guaranteed renewable policy’s premium can increase, but the policy can never be canceled by the insurance company. Bearing this in mind, in order for the insurance company to raise rates, they would have to file rate increases with your state, for everyone in that occupation rating, prove certain claims losses, and receive your state’s approval for such rate increase. Historically, this has rarely happened. A guaranteed renewable policy versus a noncancellable policy could experience up to 30% in premium savings. A guaranteed renewable policy may be attractive to an older individual who is closer to retirement.
Elimination period – The elimination period is the period of time that you must pay your own living expenses out of pocket until the policy begins to provide benefits. Think of this as a deductible. The longer the elimination period, the lower the premium will be. Popular elimination choices are 30, 90, and 180 days.
Benefit period – The benefit period is the length of time the policy will provide you income. If your disability lasts beyond this period of time, then you will be once again vulnerable to paying your living expenses out of your own pocket. For this reason, most individuals choose a benefit period that best matches the length of time they plan on continue working (until they retire). Popular benefit periods include 2 or 5 years, or a more popular choice, with coverage lasting to either age 65 or to age 67.
Residual Disability benefits – Are you able to return to work, but perhaps only part time? If you’re able to return to work partially, your income will still suffer. A residual disability benefit will help make up the difference so even if you return part time, the policy will provide supplemental benefits.