What Factors Qualify Policyholders for Lower Premiums?
Disability insurance premiums are the payments that a policyholder makes in order to keep his or her coverage in operation. These premiums are based on a variety of factors, such as occupation and medical history.
The most common payment periods are monthly, quarterly, bi-annually, and annually. Here are some of the terms you must be associated with to understand how rates are determined.
Occupation: A person’s occupation has inherent risks associated with it and usually falls into a particular income bracket. Both of these factors determine premiums, so a position that is highly compensated with low risk associated will fall into a higher occupation classification.
Pre-Existing Conditions: A person’s past medical history will help determine their future problems, so any pre-existing conditions must be reported. Most insurance providers will also require a medical examination with a doctor’s report. People who smoke or have pre-existing conditions will have higher fees.
Elimination Period: Before receiving benefits, the policyholder must wait out the pre-determined elimination period. A longer elimination period usually means lower premiums.
Max Benefit Period: The benefit period is how long a policyholder will receive benefits for a disability. It can be as short as 6 months and up to the person’s 65th birthday. Selecting a shorter max benefit period will reduce premiums, but may leave you insufficiently protected.
Non-Cancellable & Guaranteed Renewable: These two terms both mean that as long as you pay your disability insurance premiums, your coverage cannot be changed. This locks you into a plan, presuming you make payments on time. This is extremely advantageous for younger employees, because premiums tend to increase when a person is older and more susceptible to injury.