increase in disability premium

[pilar2100]

Hi - have a question about disability insurance. I purchased it before finishing fellowship so have a good deal through Principal. I have since increased the monthly amount I would receive if disabled since out in practice. My yearly premium is due soon and the statement asks if I would like to increase my yearly premium (by $90) with the Future Benefit Rider.

I was thinking this would be a good idea but what do you all think?

[LBKCLU]

The Future Benefit Increase (FBI) allows you to increase your coverage by 4-10%, based upon changes in the Consumer Price Index, for the first six years that you own the policy.

This can be done regardless of your earned income or any disability insurance inforce (individual, group or association). All you have to do is pay the higher premium.

Since the premium rates are also based upon your age at he time of the acceptance, the more you purchase when you are younger, the lower the cost will be over your career.

Also keep in mind that under the Benefit Update (BU) Rider also allows you to potentially further increase your coverage, every three years, based upon your income and other disability insurance inforce, if any.

Under that rider, if an offer is made to you to purchase additional coverage, you must purchase at least 50% of that amount in order to maintain that rider on your policy.

Therefore, it just makes sense to accept the FBI increases as the premium rates will be lower and will hedge against any offer Principal might make to you in the future under the terms of the Benefit Update Rider.

[Degos]

I have another question for the brain trust.  I'm about to start my final year of dermatology residency and just purchased the Guardian ProVider Plus policy.  My current monthly benefit is $5000 and I got the future increase rider which gives me the option to increase yearly up to a limit of $17,000/month if I can qualify financially.   According to my insurance agent, when I sign a contract for employment this year, they will let me increase to $7000/month.  In a year or two after being an attending, I'll likely be eligible for the full $17,000/month.

My question is, does it make sense in the future to increase my monthly benefit immediately when it is available?  I may be wrong but it seems like in the future if I become disabled I could just immediately apply to increase my coverage to the max allowed by my income and once the new policy is in force make my disability claim.  In the event of a real disability I would lose a few months of insurance payouts but I would also save a fortune in premium payments if I never do become disabled.

It seems too good to be true and there has to be some big downsides to this that I'm not considering. Anyone out there gracious enough to enlighten me?

[LBKCLU]

Keep in mind that is is not when you file the claim, it is based upon when you are first unable to perform the material and substantial duties of your occupation or you experience a loss of 15% or more compared to your pre-disability income as a result of an accident or sickness.

The Berkshire policy's Future Increase Option (FIO) Rider specifically states "If You exercise an Increase Option when You are Disabled or benefits are being paid, any Increase Policy issued will only apply to a new and separate Disability. Under no circumstances will an Increase Policy, issued during a period of Disability or when benefits are being paid, provide a benefit for the current Disability or current claim for benefits".