04. Non-Cancelable Disability Insurance

At age 30, serious disability is seven times as likely to occur as an untimely death, and the average duration of a disability is from four to six years.* This hazard requires careful insurance and retirement planning to avert the consequences of an unprotected disability:

1. Erosion of all savings and investments
2. Sale of residence and personal property
3. Loss of position and esteem in the community
4. Dependence on public or family charity

Most employees receive protection for short term illnesses or accidents while working but not in retirement. Coverage normally commences on the first or eighth day and continues for thirteen or twenty-six weeks. Many also have some long term coverage, but both these types of protection are intended only as a floor of benefits. Since many persons need supplemental individual disability coverage, it is important to obtain the right plan, with consideration given to these essential features:

NON-CANCELABLE AND GUARANTEED RENEWABLE - The provisions prohibit the insurance company from canceling the contract or increasing the premiums under any circumstances, such as high claims in general or large claims by the individual.

WAITING PERIOD - The period which must elapse before benefits commence. The longer the waiting period, the lower the premium.

DURATION OF BENEFITS - The period for which benefit payments are made for disabilities arising from an accident or a sickness. If the amount of your coverage or the policy provisions are inadequate, you should take steps to remedy the situation immediately. Disability protection usually requires excellent health, and there are occupational considerations as well.

There are a variety of optional benefit riders available to augment disability coverage:

LIFETIME ACCIDENT AND SICKNESS PROTECTION

RESIDUAL RIDER FOR PARTIAL DISABILITIES

INFLATION RIDERS: These have different names, such as "increasing benefit" or "cost of living." They use various methods to increase the benefits payable during a disability, so that rises in living costs are offset by additional benefit dollars.

GUARANTEED PHYSICAL INSURABILITY RIDER: Protects the insured's right to purchase future coverage regardless of future changes in insured's health and thus insurability. This is very important when planning for your retirement years.

SOCIAL INSURANCE SUBSTITUTE RIDER: Pays dollars out when government/social benefits do not.

*Sources: 1964 Commissioner's Disability Table and 1958 CSO Mortality Table.


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