How strong are the guarantees in your individual disability insurance policy?

The reason you buy a disability policy is to protect your income in case you ever become disabled and unable to work.  It’s as simple as that.  The policy will presumably protect your income by paying you a monthly benefit as long as you remain disabled, up to a certain age, such as 65 or 67.  But can you count on that policy to do what it’s supposed to do?

That’s where the policy’s guarantees come in.  The stronger the guarantees in your policy, the more likely your policy will be there to provide the protection you expect and need.

The best place to start is to insist on a Noncancellable and Guaranteed Renewable (Non-Can) policy.  How do you know if you have a Non-Can policy?  It says so, usually on the cover or first page of the policy, often in bold letters:  Noncancellable and Guaranteed Renewable. Non-Can policies provide three solid guarantees that other types of disability policies don’t provide:

1. As long as you pay the premium on time, only you have the right to cancel the policy.

The insurance company cannot cancel your policy before a certain age, such as 65 or 67, as long as you pay your premiums on time.  That means you keep the policy as long as you want it, so if and when you become disabled and need your policy, it will be there for you.

If you don’t have a Non-Can policy…the insurance company may have the option to cancel your policy under certain conditions.  If your policy gets cancelled for any reason, then the policy will certainly not be there for you later, because it’s been cancelled.

Yet, many physicians and dentists and their financial security depend on policies that can be cancelled by the insurance company for reasons other than non-payment of premium.  For example, many physicians and dentists rely on Group LTD policies, even though Group LTD policies can be cancelled by the employer or the insurance company without the consent of the insured person. Many professional association policies, though not all, can also be cancelled by the insurance company without the consent of the insured.

There’s a saying I’ve heard since I began in the insurance company in 1982:  “The best disability insurance policy is the one that’s in force when you become disabled”.  With a Non-Can policy, you have complete control to make sure that your policy is in force when you need it.

2. Your premium rate is guaranteed to remain the same until a certain age, such as 65 or 67.

Have you ever noticed how bad it feels when one of your insurance premiums goes up?  No one likes increasing payments. I certainly don’t. That’s another reason to love Non-Can disability policies. Your premium don’t increase. Don’t you wish you could say that about all of your other insurance policies?

If you don’t have a Non-Can policy…your policy’s premiums are not guaranteed. The premiums could be increased in the future, often with no limit on high they could go. Many insurance companies and professional associations offer disability insurance policies with non-guaranteed premiums.

Imagine if you had one of these types of policies whose premiums increased to the point where you actually had to decide whether or not to keep the policy. If that ever happened and you decided to cancel your policy due to its premium cost, your policy would no longer be in force. That means it would not be there for you if you later became disabled and needed it. This creates uncertainty that you should not have to deal with.

With a Non-Can policy, you have complete control of your premium rates until age 65 or 67.

3. Your policy and it’s provisions cannot be changed by the insurance company until a certain age, such as 65 or 67.

You’ve probably heard it many times:  You need a policy with Own Occupation Specialty definition of total disability or you need a policy with the Future Income Option rider to protect your future increases in income.  It’s true.  You need those, and other important features, in your disability policy. But you also need the assurance that those important features will remain in your policy, unchanged, for the duration of your working life.  Non-Can policies guarantee that whatever your policy contains today, it will contain until you turn a certain age, such as 65 or 67.

If you don’t have a Non-Can policy…the insurance company is allowed to change your policy and its provisions? Imagine how you would feel if you purchased such a policy with a definition of total disability that reads as follows:

  • You will be considered totally disabled if, due to injury or sickness, you are unable to perform the material and substantial duties of your occupation.

Then, several years later, the insurance company exercises their right to change the definition of total disability to the following:

  • For the first 24 months of benefits, you will be considered totally disabled if, due to injury or sickness, you are unable to perform the material and substantial duties of your occupation,
  • Thereafter, you will be considered totally disabled if, due to injury or sickness, you are unable to perform the duties of any reasonable occupation.

Wouldn’t that be disturbing?  Again, if your policy is not Non-Can, there is constant uncertainty regarding your policy and its ability to be there to perform satisfactorily when you need it most:  if and when you become disabled.

With a Non-Can policy, you have complete assurance that neither your policy nor its provisions will be changed before age 65 or 67.

Take control of your disability insurance coverage with a Non-Can policy.  I think you’ll love it.

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