Disability insurance is not ultimately about disability; it is about protecting a person’s or family’s financial future in the event of a disabling accident or sickness.
If you are injured and off work for even three months, would you have enough in savings to cover your living expenses? Consider what you might face financially if you suffer a major medical condition such as cancer and were unable to work for over a year. The vast majority of Americans do not have enough savings to pay their expenses even during a short-term emergency. With disability insurance it will guarantee that you will have some income when you can’t work.
This is the core Disability Insurance product: it is designed to replace a portion of your earned income if you become too sick or hurt to work and should be positioned as the foundation of any sound financial plan. There are two basic types of individual coverage: Guaranteed Renewable and Non-Cancelable.
Non-Cancellable and guaranteed renewable indicates there will be no changes (unless you want them) to your premium schedule, your monthly benefits or your policy benefits up to age 65 (or another specified age).
This type of policy is notable when it comes to disability insurance. Since many people don’t have a guarantee that their income will never go down again, under a non-cancellable and guaranteed renewable policy, even if your income goes down later in life, and you are totally disabled, the company will pay you the total disability benefit you originally placed in-force.
A guaranteed renewable policy is an insurance policy feature that obligates the insurer to continue coverage as long as premiums are paid on the policy. While re-insurability is guaranteed, premiums can rise based on the filing of a claim, injury, or other factors that could increase the risk of future claims. Premiums can also be raised on an entire class of insured people during the life of a guaranteed renewable policy for health, life or disability insurance.
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