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Disability Insurance Future Increase Rider

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  • Disability Insurance Future Increase Rider

    Hello everyone, I have a own occupation disability insurance policy with Ameritas. I am a 32 YOM in good health. I currently have a policy at $5,200.00 for $1,699.26 and another policy with Ameritas which I purchased when my daughter was born last year $1,000.00 for $311.96. My first policy has a future rider increase that I may exercise. The estimated annual cost for any increase will be $328.00 per $1,000 of additional monthly benefit ($12,000 additional annual benefit) or $32.80 per $100. I believe this rider continues with the policy for 5 years (this is my second year with the policy) but goes away if I do not exercise it. Is this someone most people do? Is this a good idea? Any thoughts?

  • #2
    Hmm... I’m not exactly sure what you’re asking, nor do I know your situation. Are you a resident or attending? What’s your specialty?

    I’m not sure about the rider only lasting for 5 years. Or about it going away if you don’t exercise it. Usually a benefit update rider goes away if you don’t exercise it, but the future increase option with Ameritas does not expire after five years nor does it expire if I don’t use it on my policy.

    Assuming you’re the average 32 year old (beginning of career, likely a negative net worth), you should buy as much benefit as Ameritas will sell you.


    • #3
      Exercise whatever DI insurance you need and qualify for. Just depends how much you want to spend.
      Availability and need are two different questions.


      • #4
        Bumping with the hopes that Scott Nelson-Archer will see and answer, as he always gives great input on these questions.

        OP, if he doesn’t answer I would call the broker/agent you used to get the policy in the first place and discuss with them.


        • #5
          It would appear to me that you bought a $5,000 plan from Ameritas that actually had 2 separate features on it. My assumption is that you had the AIR (annual increase rider) which trends the initial benefit up by 4% each year for the first 5 years then it falls off Unless you renew it, that is why your $5k is now $5,200 of benefit. In addition you have a Future Purchase Option (often referred to as an FPO or FIO but don't confuse with a BU/Benefit Update) which is a pool set aside that you can pull from to increase your policy at a pace and amount that you choose. That pool of increase options has a cost to so as you buy more benefit from that pool the cost for those options actually goes down because you have used the option. Now with Ameritas they actually issue a separate policy page and policy number when you exercise the FPO so again my assumption is the $1,000 benefit you reference is actually the FPO increase on Ameritas as well. In summary my gut reaction for you is that you bought a $5k policy that is now past 1 year, the AIR took it to $5,200 and will increase by $200 of monthly benefit every year for the first 5 years, you had FPO on your contract, and bumped it up by $1k so in total right now you have $6,200.

          My question to you would simply be what is your monthly expense to pay your bills and stuff a some away for retirement? My theory is buy what you need and have options for what you might want.
          Scott Nelson-Archer, CLU, ChFC
          303-953-0263 Direct / [email protected]