Disability Insurance isn’t new. As an insurance product it evolved out of accident coverage back in the late 1800s. Although the idea of replacing lost income due to accidents and injuries was a good one, the subjective nature of the term “disability” and the ease with which the policies could be abused caused the insurers to lose income. Many insurers stopped providing policies all together. Throughout the 20th century Disability Insurance went through several iterations and redefinition. The policies would swing across the century from too liberal to too conservative and back again.
As an insurance, Disability Insurance was a good enough product that insurers knew they needed to keep reworking it to make it something that their clients could use, but not abuse. In times of economic downturn for example it could not become “unemployment” insurance; nor could it be used as a long-term solution to replacing income for people who could otherwise return to work.
Around the end of the 20th Century, major insurers agreed to provisions in Disability Insurance, making it a product that works for both the insurer and the insured. Some of the provisions include caps and limits to coverage, renewable policies instead of non-cancelable policies, reclassification of health ratings, and sex-distinct rates, among others.
In the process of revising Disability Insurance, this most recent change to the industry standard includes a closer look at the risk factors of the insured. Underwriters are paying closer attention to the risks they accept and more information is being requested by the insurance companies. Along with risk factors, underwriters are restructuring their pricing so disability injuries that may have been more costly to the insurance companies, may be underwritten at higher costs.
The contract differences are few from company to company, and state to state. AC Financial offers Disability Income Insurance to our clients. To learn more, call 800-564-3196 to speak with a knowledgeable agent.
