Non-Cancelable and Guaranteed Renewable types of Disability Insurance.

There are several types of Disability Insurance Policies available. Some policies are offered through employers, while others can be purchased through the individual market.  Non-Cancelable and Guaranteed Renewable is a type of plan that you will want to look for.  

Dependent upon the type of policy you have, in some cases an insurance carrier has the ability to change your plan’s benefits and premiums.  In other instances, they do not.  Therefore, it’s important for you to know what protection your policy does and does not afford.

A plan that is both “Non-Cancelable and Guaranteed Renewable” means that the insurance carrier can never change your benefits, contract language, or premiums. With this type of policy, whatever benefits and premiums you initially purchase will be locked in for the life of your plan (unless you personally opt to change your coverage).  

Let’s break this down further….

Non-Cancelable

Non-Cancelable is a type of policy that guarantees after you place a policy in-force, there will be no changes to your plan’s coverage provisions as long as you continue to pay your premiums on time.  The insurance carrier cannot go into your contract agreement and change your policy in any way until age 65 or a later age if specified in your contract.  This is a highly desirable.  You would not want any insurance carrier (or any other entity or person) to have the freedom to change your coverage unless you specifically wanted them to do so.  Otherwise, the insurance carrier could easily weaken your coverage, leaving you exposed to unnecessary risk down the road.

Guaranteed Renewable

Guaranteed Renewable is also a type of insurance policy in which the insurance carrier cannot alter your coverage or cancel your policy, but an insurance carrier does have the ability to increase your premiums in the future with this type of policy.  A Guaranteed Renewable Plan is advantageous in the sense your coverage language is guaranteed but also has the disadvantage of your rates being able to increase drastically in the future.

Now, let’s examine Non-Cancelable and Guaranteed Renewable policies within three possible categories: Group, Association, and Individual disability coverage options.  

Group Disability Insurance

Group Disability Insurance plans are owned by your employer.  Your benefits and rate are subject to change year-by-year, depending on what coverage your employer decides to extend to you. There is often no future guarantee of coverage and your employer has the freedom to switch carriers or types of policy offered, typically on a yearly basis.  

Association Disability Insurance

Association Disability Insurance policies are owned by an association, for example Medical and Dental Associations, as well as numerous Professional Societies and Medical Academies.  Even though you may purchase this type of plan through the individual market, you don’t own your policy, the association does.   Association policies are NOT Non-Cancelable and Guaranteed Renewable.  This means your plan’s important coverage provisions could be changed in the future, and your rates are subject to increase as well.  In fact, major medical and dental associations often increase rates every 5 or 10 years.  So, while the rates are lower initially, the cumulative cost of an association plan ends up costing you more throughout your career due to scheduled rate increases. 

Individual Disability Insurance

Individual Disability Insurance Plans are most often Non-Cancelable and Guaranteed Renewable, offering you the best guarantee of coverage and rates.  Because the rates are “fixed” (meaning that they cannot be increased), this type of plan will typically save you the most money throughout your career in addition to providing the best benefits.  

With a Non-Cancelable and Guaranteed Renewable Insurance plan, you’re essentially in the driver’s seat, and you can move forward with the confidence that your plan’s benefits will never change and your rates will never increase unless you decide to go in a different direction. This gives you the assurance that the disability coverage you need will always be there in the event a disability should occur, and no employer or association can alter that.

As always, we’re here to help!

Chris Wimberly

The Disability Doc

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*This information is solely used for general market educational purposes.  It does not provide legal rights or actual carrier policy language.  Please review the respective policies for the complete terms and conditions.