We’ll get right to the point: The most important thing you can do to protect your financial future is to make sure your disability insurance coverage keeps up with your income by regularly increasing your policy.
Let’s use a scenario to explain why it’s so important…
Imagine you purchased a disability insurance policy with a $5,000 monthly benefit early on in your residency making a $60,000 annual salary. That’s pretty good coverage!
Fast forward a few years and you’re now earning a $300,000 annual salary as an attending, but because you didn’t increase your coverage, your monthly benefit is still $5,000. Not so great!
The lesson from this scenario is that if you were unable to work due to injury or illness, you could be leaving a considerable amount of money on the table. In this scenario, a physician with a $300,000 annual salary could be missing out on an additional $8,700 per month in coverage if they had kept up with increases.
The pros of increasing your policy and the cons of not increasing your policy are easy to understand, but how we get there can get a little confusing. That’s because when you can increase your policy’s coverage, how you go about doing it, and who is eligible to increase their coverage varies from policy to policy and carrier to carrier.
In this blog we will cover the basics of policy increases so you can make an informed decision about increasing your coverage.
Keep in mind: The fastest and easiest way to learn more about increasing your policy is to get in touch with the Pattern client services team at service@patternlife.com.
Don’t have a disability insurance policy? Submit a free quote request today and Pattern will shop and compare policies from five carriers for you side by side with no obligation to buy.
While what insurance providers consider an Option Date may vary, this is often the anniversary of when you got your policy. In addition, each provider has different rules on when you can start the increase process and when it needs to be completed by.
You will want to mark this date on your calendar so you know when to start thinking about increasing your policy. Not sure what your option date is? Get touch with the Pattern client services team at service@patternlife.com.
An Option Window is the period of time that you have to apply for an increase to your coverage. This window is often a 60-day period that encompasses the 30 days before your option date and the 30 days after your option date.
This is a policy rider that allows you to apply to increase your coverage every year without paying needing to go through medical underwriting.
Most insurers will allow you to keep this rider if you choose not to use it, which is why you will also see this called a Guaranteed Increase Option (GIO).
Does this sound like you? Email the Pattern client services team at service@patternlife.com to start the policy increase process.
Also known as a “Benefit Increase Rider,” this is a free policy rider that allows you to apply to increase your coverage every three years without paying an additional fee or needing to go through medical underwriting. Similar to the Future Increase Option, this rider often only requires you to provide a financial statement for your application.
It is important to note that some insurance carriers will cancel this rider if you do not use it.
Does this sound like you? Email the Pattern client services team at service@patternlife.com to start the policy increase process.
Advanced increases are for policyholders with an FIO/GIO or BPR/BIR rider who are requesting an increase to their coverage outside of their option window.
You are often eligible for an advanced increase if you have a “qualifying life event.” Such events include receiving a large increase (i.e. moving from resident to attending), getting married or divorce, having a child, aging out of your parents’ insurance coverage, or moving to a new state.
Does this sound like you? Email the Pattern client services team at service@patternlife.com to start the policy increase process.
An FIO Pool is the remaining amount you have left to increase your policy and is often two to three times the amount of your original benefit.