What is the Cost of a Disability Insurance Plan?
There are several types of disability premium structures that are available. The first one is a guaranteed Level Premium. This premium is guaranteed not to change until some point in the future, usually age 65. This is the one that you want to obtain, or you want to compare to, in order to see if you’re getting a good deal.
There are other plans that have a step-rate, that start out lower, and then increase over time, and maybe that’s in five-year intervals. There is also one that is annually increasing, so every single year that premium will go up. If you’re looking at these through proposals or illustrations, sometimes it’s very difficult to decipher which is the best deal for you.
What we suggest is, when you’re looking at any companies, get their guaranteed Level Premium because that’s the one they’re guaranteeing is going to work. Once you look at apples-to-apples comparison, then it’s much easier to see which company is offering you the best buy. You may use an annually increasing policy very temporarily as long as you know that you want to level those premiums, which is usually guaranteed, at some point in the future so that those rates won’t continue to go up as you age.