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Products  Disability Insurance (DI) Policy Renewal Provisions
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Disability Income Policy Renewal Provisions
4 Types:
Best and Expensive
1. Non-Cancelable and Guaranteed Renewable:
This provision guarantees that after a policy is placed in-force, there will be no changes to the premium or to the policy benefits through age 65 — regardless of the insured's working status, health, or income level. This means no surprises for your clients down the road. Some carriers require Non-Can for their Own-Occ rider. Use Non-Can on the “Cadillac Plan”. It is usually 50% more expensive than guaranteed renewable.
Good and Affordable
2. Guaranteed Renewable:
The insurance carrier cannot change the premium or the benefit for an individual, but it can make a change to premium for an entire group of policyholders, categorized by state, underwriting class or policy year. The change would need to be approved by insurance regulators before going into effect. Use guaranteed renewable policies to bring down the cost if your client objects to the price of the better, non-cancelable and guaranteed renewable policy. Writing a policy? Ask us about the company’s history of rate increases. Standard Insurance Company has for example never raised rates on existing policy holders. We use this on most DI policies. It simply requires to many increases over the life of the policy to make up for the added cost of the Non-Cancelable provision.
Avoid for Individuals
3. Conditionally Renewable:
It states that the policy is renewable only if the insured continues to meet certain conditions outlined in the policy. The most common condition for renewal is maintaining full-time employment (group) or membership (association). The carrier may increase the premium at the anniversary date or at prescribed age bands, such as five-year increments. This provision is found in group and association plans.
If you can’t get anything else…
4. Optionally Renewable and/or Cancelable:
These provisions allow the insurance carrier to change the terms or cancel the policy, at an individual level. This type of policy should be used only if nothing else is available. It provides immediate protection — but no guarantees.
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