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Two Long Term Disability Provisions Not to Overlook - Non-Cancellable/Guaranteed Renewable and FIO

December 17, 2011 | Comments: 0 | Views: 126

When purchasing LTD coverage, the Monthly Benefit Amount, the Elimination Period (i.e., deductible), the Benefit Period and the definitions of disability are basic policy provisions that are critically important for every applicant to carefully consider. However, there are additional provisions that are also important although most applicants are less aware or concerned about them. Agents and brokers, especially those that specialize in the sales of LTD, should and I would think typically do educate their prospects concerning their value and significance.

1. Non-Cancellable and Guaranteed Renewable: When a policy is " Non-Cancellable and Guaranteed Renewable", the insured is guaranteed that the premiums on the policy will remain unchanged for the duration of the policy, provided the policy is kept in force by paying premiums on a timely basis. Many policies may guarantee the rates until age 65 and thereafter the premiums may be increased. These provisions generally will not present any problem. However, policyholders need to understand how important it is for them to ensure their premium expenses remain stable throughout the life of the policy. Especially during those years when their income is increasing, it is to their advantage that these essential expenses providing income protection remain stable.

2. Future Increase Option: This optional rider is often referred to as an "FIO" provision. It is particularly important for career professionals and especially physicians and dentists completing their education and training at the start of their careers. They can anticipate substantial increases in income as time progresses, and they become well revered within their area of specialization. Having a FIO guarantees them the ability to increase his/her monthly benefit in the future, without requiring medical screening.

Young professionals frequently do not envision that someday they may suffer an injury or develop an impairment making them ineligible to purchase additional disability coverage to assure their ability to protect their income flow. If they never have a problem, that is great! But the consequences of not being able to purchase adequate income protection if they become impaired for any reason, is too much of a risk not only for themselves, but for their families. It may mean the difference of their being able to maintain their establish lifestyles that have gradually changed as they became increasingly more successful. The FIO helps ensure their ability to provide for their children's education, the needs of their spouses as well as their own ongoing needs.

Young professionals frequently do not envision that someday they may suffer an injury or develop an impairment making them ineligible to purchase additional disability coverage to assure their ability to protect their income flow. The consequences of not being able to purchase adequate income protection if they become impaired for any reason, is too much of a risk not only for themselves, but for their families. Read on.

Source: EzineArticles
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