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Disability Insurance: Long Term: Individual

Renewal Terms

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There are three types of individual disability contracts:

Noncancellable

Policies that are noncancelable cannot be terminated, amended or extra premiums charged by the insurance company, as long as the insurance policy is in effect.

You can renew the policy on the same terms each year so long as you pay premiums on a timely basis.

This is the most expensive type of policy because it locks the company into a permanent contract with a pre-set price.

Guaranteed Renewable

The insurance company can neither cancel nor alter the provision of a policy that is guaranteed renewable.

The insurer cannot raise a particular individual’s premiums. However, the insurer can raise the premiums for everyone who has purchased the same type of contract. Notice must be given before an increased premium takes effect.

Noncancelable and Guaranteed Renewable

The insurance company cannot change any policy provisions and cannot increase premiums as long as the premiums are paid in a timely manner. To understand what happens when “noncancelable” and “guaranteed renewable” are combined: if you change to a more risky job, the insurance company could change the premiums with a guaranteed renewable policy – but not with a policy that is both noncancelable and guaranteed renewable.

Commercial (also known as “Conditionally Renewable”)

In commercial contracts, the insurance company retains the right to raise the premium at any time and may cancel the contract at its discretion.


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