Disability Insurance Articles

Ways To Negotiate Disability Insurance Premiums

2010-07-16

Disability insurance is an important piece to securing your financial future. As a policy holder, you would use disability insurance in the unfortunate event of an accident that prevented you from working. You would be eligible to receive payments supplementing your loss of income. There are ways to negotiate disability insurance premiums to find the most affordable option.

All disability insurance policies are not alike. There are different aspects to each policy that can be tailored to suit your specific needs. Each policy has a few aspects for you to consider, which can significantly lower your premium payments.

The first thing to consider is, when does the policy actually pay you? Own occupation disability insurance is the most comprehensive and the most expensive in this category. If you are unable to perform the duties in your occupation, under the own occupation policy, you will receive benefits even if you go back to work in a different type of job. This may not be necessary. One way to negotiate premiums is to consider instead, income replacement disability insurance. With income replacement, you will receive payments while you are out of work, and the payments will stop when you go back to work in any capacity.

The second aspect of your disability insurance policy to consider is the elimination period. This is the period of time between the beginning of your disability and your eligibility to start receiving payments. The elimination period varies from 30 days to 720 days. The longer the elimination period, the more savings you receive.

Another provision in your policy to help negotiate premiums is residual disability coverage. If you return to work after a disability, but your income isn't at the level it previously was, residual disability insurance will cover the difference in your income. If you are trying to save money on premiums, this may be unnecessary.

Lastly, consider whether the policy is non-cancellable and guaranteed renewable. This is the most expensive option in its category. This is a guarantee that your benefits and premiums legally cannot change over the life of the policy. The next step down to consider for lower premium payments would be the guaranteed renewable policy. With this policy, you will save money, but review it carefully to understand under what circumstances changes could be made.

There are many ways to negotiate premiums on a disability insurance policy. Consider your goals with the policy. If you can reasonably live off a reduced income in the event of a disability, you may be able to take advantage of these suggestions to lower your premiums.