The Jacobs Company
Options Available with Disability Insurance
Many disability policies offer a provision under which the insured can receive a refund of 7 or 8 years of premiums if he/she can go 10 years without a disability. If you are disabled, however, any future return of premiums will be reduced by any disability benefits paid. In general, our analysts recommend against the purchase of this option. This option is very expensive and can boost the price of the policy by as much as 50%. If you were to put aside the extra premium and invest it, you would usually be money ahead. Also, consider the possibility that you spend all of this extra premium and suffer a disability. You have now spent a lot of extra premium to receive the exact same benefit. Essentially, this option boils down to buying disability insurance in case you are not disabled, and then buying this option in case you are not disabled. Don't do it!
This document was last modified on July 26, 1999
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