Comparing Disability Insurance Policies

Disability insurance companies all have their own competitive niches and policy provisions that must be carefully compared and understood in order to make sure the most appropriate policy is selected. The goal when evaluating competitive policies is to provide a fair and accurate analysis so that the best policy based on the desired objectives can be identified. The guidelines that should be utilized when considering competing disability policies include: compare the specific definitions of disability, carefully review policy provisions and their costs, don’t compare policies on price alone, and determining if one company will provide a more favorable occupational class.

Compare Disability Policies on an “Apples to Apples Basis”

When comparing disability policies, make sure that the illustrated benefits are the same. The elimination period, benefit period and monthly benefits should always be equal to provide an accurate comparison. With policy benefits being equal, premiums can be carefully evaluated and potential policy feature variations can accurately be identified. If there is a large discrepancy in the prices of competing policies, there is a strong likelihood that the higher priced policy has more comprehensive protection. By comparing policies on an “apples to apples basis”, the more favorable policy provisions can easily be uncovered.

What are the Definitions of Disability?

Review Policy Provisions and Their Costs

When considering disability policies it is critical to review specific policy provisions with their costs in mind. If there is a big discrepancy in costs, you can be assured that the provisions are likely not the same. The more attractive and or flexible the policy provision or benefit the higher the cost will be. In most cases, higher prices reflect more liberal provisions. Comparisons of policy provisions and costs should always be made in light of your goals and needs.

Don’t Compare Policies on Price Alone

Disability income insurance is not a commodity and therefore should not be compared based on price alone. As just mentioned, with disability policies, the more comprehensive the benefits the higher the costs. It can be said another way as well, the lower the policy costs the less favorable the benefits. The main point is to evaluate policies based on your own objectives as sometimes more liberal benefits do not warrant increased premiums.

Will a Company Provide a More Favorable Occupational Class?

Each disability insurance provider has their own occupational class guidelines they use to determine risk of disability. The less hazardous the specific job duties of the occupation the more favorable the policy language and potential benefits available. By identifying these specific job duties and comparing the occupational class guidelines of each insurance company, you may be able to identify an opportunity to obtain a better occupational class.