A future purchase option is a feature of some disability insurance policies that allows the policyholder to purchase additional coverage at a future date, without having to provide evidence of insurability. The premium for the additional coverage is based on the age of the policyholder at the time the option is exercised. What is a future purchase option? A future purchase option is an insurance rider that allows the policyholder to increase the amount of coverage on their policy at a later date, without having to go through the underwriting process again. This is typically used to keep pace with inflation or to insure against a significant life event, such as the birth of a child. What does guaranteed insurability option mean? Guaranteed insurability options (GIOs) are riders that can be added to disability insurance policies. They guarantee that the policyholder will be able to purchase additional coverage in the future, even if their health has changed.
There are two main types of GIOs:
- Level benefit GIOs: This type of GIO allows the policyholder to purchase additional coverage in the future, without having to prove their insurability. The benefit amount of the new coverage will be the same as the original policy.
- Increasing benefit GIOs: This type of GIO allows the policyholder to purchase additional coverage in the future, without having to prove their insurability. The benefit amount of the new coverage will be greater than the original policy.
What is the difference between simple and compound inflation?
Disability insurance provides benefits to policyholders who are unable to work due to an injury or illness. Simple inflation refers to the increase in the cost of living over time, while compound inflation takes into account the additional costs associated with an injury or illness.
What is a premium waiver?
A premium waiver is a type of insurance rider that allows policyholders to stop making premium payments if they become disabled and are unable to work. The waiver usually goes into effect after the policyholder has been disabled for a certain period of time, and it typically lasts for the duration of the policyholder's disability.
What is the main purpose of a total disability plan? The main purpose of a total disability plan is to provide benefits to policyholders who are unable to work due to a disability. The plan pays a monthly benefit to the policyholder, which can be used to cover living expenses and other costs associated with the disability.