What Is a Future Increase Option Rider and Why Would I Want It?
You have decided to purchase an individual disability insurance (IDI) policy to protect your income for the €just in case€. Your agent most likely went over all of the options and riders that are available. One of them is a future increase option rider. But what is it and why would you want to spend money to add it to your policy?
Let's start with the first part of the question. A future increase option rider offers you the opportunity to purchase additional coverage each year on your policy anniversary with no medical insurability requirement. Each IDI carrier offers a slightly different variation of this rider and some allow you the opportunity to purchase additional coverage every 3 years. Your eligibility will be determined by your then-current financial situation and taking into consideration other disability insurance you have in force, for which you have applied, or for which you are eligible. You would not have to go through medical underwriting again and, depending on your income, you may be able to purchase up to the rider maximum. Even if you developed some sort of medical condition that would normally preclude you from purchasing additional coverage, your eligibility for additional coverage with this rider would be determined by your then-current financial situation.
For example, let's say you purchased an individual disability insurance policy and qualified for $5,000 of monthly benefits. At the time you bought the policy, you added a future increase option rider. The next year you get a letter from the insurance company stating that you may be eligible to purchase additional coverage with the future increase option rider. Your income has gone up and you would now qualify for an additional $1,000 in benefits. During that year period, even if you developed severe diabetes or some other sickness or injury that didn't cause you to be disabled, you would still be eligible for the increased coverage. If you did not have this option, you may not be able to buy the additional insurance coverage because of your recent sickness or injury. Some companies allow you to increase your option even if you are disabled and on claim. The additional coverage you bought while disabled would then apply to any new and separate disability.
In order to apply for the additional coverage, you would simply need to complete and sign a short application which can be provided by your agent. In addition, you must provide evidence of your income, employment and other disability insurance in force or for which you are eligible.
Registered representative of Park Avenue Securities LLC (PAS), 1355 Piccard Drive, Suite 380 Rockville, MD 20850. Securities Products and Services offered through PAS 240-683-9700.
Laurence J Laskin, Financial Representative, The Guardian Life Insurance Company of America (Guardian), New York. PAS is an indirect, wholly owned subsidiary of Guardian
Laurence J Laskin is not an affiliate or subsidiary of PAS or Guardian
PAS is a member FINRA, SIPC
The views and opinions expressed herein are that of the author and do not represent the views and opinions of The Guardian Life Insurance Company of America, its subsidiaries or affiliates.
Let's start with the first part of the question. A future increase option rider offers you the opportunity to purchase additional coverage each year on your policy anniversary with no medical insurability requirement. Each IDI carrier offers a slightly different variation of this rider and some allow you the opportunity to purchase additional coverage every 3 years. Your eligibility will be determined by your then-current financial situation and taking into consideration other disability insurance you have in force, for which you have applied, or for which you are eligible. You would not have to go through medical underwriting again and, depending on your income, you may be able to purchase up to the rider maximum. Even if you developed some sort of medical condition that would normally preclude you from purchasing additional coverage, your eligibility for additional coverage with this rider would be determined by your then-current financial situation.
For example, let's say you purchased an individual disability insurance policy and qualified for $5,000 of monthly benefits. At the time you bought the policy, you added a future increase option rider. The next year you get a letter from the insurance company stating that you may be eligible to purchase additional coverage with the future increase option rider. Your income has gone up and you would now qualify for an additional $1,000 in benefits. During that year period, even if you developed severe diabetes or some other sickness or injury that didn't cause you to be disabled, you would still be eligible for the increased coverage. If you did not have this option, you may not be able to buy the additional insurance coverage because of your recent sickness or injury. Some companies allow you to increase your option even if you are disabled and on claim. The additional coverage you bought while disabled would then apply to any new and separate disability.
In order to apply for the additional coverage, you would simply need to complete and sign a short application which can be provided by your agent. In addition, you must provide evidence of your income, employment and other disability insurance in force or for which you are eligible.
Registered representative of Park Avenue Securities LLC (PAS), 1355 Piccard Drive, Suite 380 Rockville, MD 20850. Securities Products and Services offered through PAS 240-683-9700.
Laurence J Laskin, Financial Representative, The Guardian Life Insurance Company of America (Guardian), New York. PAS is an indirect, wholly owned subsidiary of Guardian
Laurence J Laskin is not an affiliate or subsidiary of PAS or Guardian
PAS is a member FINRA, SIPC
The views and opinions expressed herein are that of the author and do not represent the views and opinions of The Guardian Life Insurance Company of America, its subsidiaries or affiliates.