Written By Caitlin See
Long-term disability insurance is a necessity for physicians who are not yet financially independent. After devoting a decade or more to your education and training and racking up hundreds of thousands of dollars in student debt, losing the ability to work in your specialty is one of your greatest risks. But finding the right disability policy takes some serious consideration as each insurance carrier has built-in features and optional riders that enhance coverage — as is the case with non-cancelable disability insurance.
Non-cancelable disability insurance guarantees your premiums won’t change. But this policy provision can come at a price. Here’s what you need to know about buying disability insurance with a non-cancelable policy rider.
What is non-cancelable disability insurance?
A non-cancelable disability insurance policy locks in your premiums through your policy’s termination date. Depending on the disability insurance company, non-cancelable provisions might be built into the base policy or available as one of many optional policy riders.
For example, The Standard (one of the “Big 5” individual disability insurance carriers) offers an optional noncancelable insurance policy rider that guarantees rates as long as you pay your premiums in a timely manner. But this feature is automatically included in the base policy if you live in Florida.
Non-cancelable disability insurance can be particularly valuable if you’re just starting your medical or dental career. You’ll receive the best rates for disability insurance when you’re at the youngest and healthiest stage of your life. Having the ability to lock in the cheapest rates for the duration of your career — even if your health or income changes — is a huge benefit of non-cancelable disability insurance.
Related: Guardian Disability Insurance, MassMutual Disability Insurance, Ameritas Disability Insurance, Principal Disability Insurance
Is non-cancelable different from guaranteed renewable disability insurance?
With a guaranteed renewable policy, your disability coverage won’t change as long as you make on-time premium payments. The insurer won’t alter your monthly benefit amount, benefit period, elimination period or other policy specifics unless you request it. However, your premiums can increase if you file a claim or otherwise pose an increased risk for future claims.
The most comprehensive disability coverage has both non-cancelable and guaranteed renewable provisions. Policies that are both non-cancelable and guaranteed renewable ensure your policy can’t be canceled, disability benefits can’t be reduced, premiums can’t be increased and policy provisions can’t be changed.
Pros and cons of a non-cancelable policy
Non-cancelable disability insurance has long-term benefits, including:
- Your premium stays the same even if your income changes. If you have level premiums, what you pay today is what you’ll pay next year, five years from now, and so on until your policy expires (e.g., age 65). Whether your income increases or falls, you’ll keep the same level of coverage for the same rate. However, your premiums will change if you exercise a future purchase option after your residency or later in your career. The same applies if you make other voluntary changes to your policy.
- You won’t have to requalify for coverage if you change professions. Even if you move into a riskier occupation class, your policy benefits and premiums will remain the same.
- Your future health and other risk factors won’t affect your costs. Once you lock in non-cancelable disability insurance, the cost of disability coverage won’t change if you develop health issues or if your overall disability risk increases with age.
That said, there are some potential drawbacks to choosing a non-cancelable policy, such as:
- You’ll likely have higher premium rates straight out of the gate. Whether non-cancelable provisions are a standard feature or an optional add-on, this type of policy generally costs more. The disability insurance carrier is taking on a bigger risk by not being able to adjust premiums later in your career. So, you’re going to pay more to spread out that risk over the life of the policy.
- Rates are only guaranteed until you reach the policy’s expiration date. Many long-term disability policies provide coverage through age 65. So, if you buy an own-occupation disability policy at age 34, you’ll pay 34-year-old rates for as long as you continue making premium payments. But once you hit age 65, your policy will be reevaluated and you’ll likely need to pay higher premiums to maintain coverage. The good news is that you shouldn’t need disability insurance at this point under normal circumstances.
For most physician policyholders, the overall benefits of non-cancelable disability insurance outweigh any additional premium charge.
Who should buy non-cancelable disability insurance?
The idea of becoming disabled can seem like an improbable “what if” situation. But there are roughly 61 million adult Americans living with a disability today. To think that you’ll be able to dodge any and all accidents, injuries, illnesses or medical conditions for the entirety of your career is a risk that isn’t worth gambling.
Your ability to work is your greatest asset. Therefore, adequate income protection for your medical or dental specialty should be a priority. But you also need to ensure your disability insurance policy protects you in other ways, such as locking in premiums from the jump. Knowing your premiums and coverage will not change provides predictability and peace of mind that can often be missing when there’s a ton of fine print.
That’s why SLP Insurance provides quotes for own-occupation coverage that includes both non-cancelable and guaranteed renewable provisions. Our team will review your existing coverage to help find the best disability insurance policy with the top discounts for your situation. Fill out the form below to get started!
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