Understand Types of Individual Disability Insurance

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There are 3 types of individual disability insurance as follow:
1. Commercial Policy
a) Premiums can be changed or cancelled on an individual basis, usually occurring on the anniversary date.
b) Restrictive clauses and exclusions can be added by amendment after issue.
c) Contract wording may be prohibitive.
d) This type of policy may be issued as an “Accident Only” policy, or as an accident and sickness policy and rate are the least expensive of the three types.

2. Guaranteed Renewable Policy
a) Renewal is guaranteed and policy cannot be cancelled, amended or changed after issue.
b) The insurance companies retain the right of premium adjustment, contract is guaranteed in every way.
c) Premiums may be adjusted by class, usually on the anniversary date.
d) Contract provisions are not as restrictive as commercial policies.

3. Non-Cancelable and Guaranteed Renewable Policy
a) The insurer guarantees all the contract provisions and cannot change or eliminate any benefits after issue, even in the event of an occupational change resulting in more hazardous work conditions.
b) Policy improvements are frequently offered to existing policy owners.
c) premiums are guaranteed and may not be adjusted after issue.
d) No policy changes are allowed and the contract is considered to be unilateral to one sided.
e) New restrictions or exclusions cannot affect policies already in force.

Most conditions are defined by contract and impact on the benefits provided and the premiums charged. Make sure to read the contract carefully

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