Disability Insurance - Non-Cancellable vs Guaranteed Renewable

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TrustTheMarket
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Joined: Thu Mar 31, 2022 8:04 am

Disability Insurance - Non-Cancellable vs Guaranteed Renewable

Post by TrustTheMarket »

Hi all. My wife and I are weighing our options here. The cost difference between a non-cancellable policy and a guaranteed renewable policy is about $35 per month. Obviously non-cancellable is iron clad but our insurance rep said we are most likely safe with a guaranteed renewable plan. It is extremely rare for premiums to be increase under this mechanism.

Does anyone have an opinion? And while we’re at it, any quick thoughts on these riders?

1. Catastrophic
2. Cost of Living
3. Future insurability increase

Thanks.
Chardo
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Joined: Fri Feb 18, 2022 12:16 pm

Re: Disability Insurance - Non-Cancellable vs Guaranteed Renewable

Post by Chardo »

How old are you? What occupation? How much is that $35 as a percentage of premium?
secondopinion
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Re: Disability Insurance - Non-Cancellable vs Guaranteed Renewable

Post by secondopinion »

TrustTheMarket wrote: Sun May 22, 2022 9:20 pm Hi all. My wife and I are weighing our options here. The cost difference between a non-cancellable policy and a guaranteed renewable policy is about $35 per month. Obviously non-cancellable is iron clad but our insurance rep said we are most likely safe with a guaranteed renewable plan. It is extremely rare for premiums to be increase under this mechanism.

Does anyone have an opinion? And while we’re at it, any quick thoughts on these riders?

1. Catastrophic
2. Cost of Living
3. Future insurability increase

Thanks.
A guaranteed renewable policy only ensures that they cannot deny you if you live up to your agreement; they can still raise rates though.

Given reasonable premiums in the first place, go with the non-cancellable policy; they cannot play any games with the price.
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LadyGeek
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Re: Disability Insurance - Non-Cancellable vs Guaranteed Renewable

Post by LadyGeek »

This thread is now in the Personal Finance (Not Investing) forum (insurance).
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BruDude
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Re: Disability Insurance - Non-Cancellable vs Guaranteed Renewable

Post by BruDude »

I'd say it depends on how much that $35/month is relative to the total premium. If it's a $500/month policy I'd say that's pretty reasonable since you don't want it to become a $1000/month policy. If it's a $200/month policy that is less reasonable. In general DI policies don't change much in premiums but what happens if there is another recession and the company's financials are doing poorly? What if they exit the DI business and don't care about their existing block of business anymore?

Catastrophic rider - not really necessary, would only include if you have all of the other "bells and whistles" already included and just want the best possible coverage.

COLA - definitely a good idea if you are younger, especially considering current inflation trends.

Future insurability - important but depends on how much coverage you're buying now. If the policy has a $15k/month benefit you may not really need this, but if it has a $5k/month benefit and your earning potential is mid-six figures then it's very important.
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