Step Rated Policies

Step rate is a term describing a type of disability insurance policy in which the premiums go up as you age
and your chances of being disabled increase. Step rated plans generally go up in 5 year increments, but sometimes they go up annually. Step rated plans are almost always initially cheaper than fixed premium (noncancelable) disability plans. The insured should weigh how long they plan on keeping the insurance against the present value of premiums to decide the best course of action. Over the next 5 years the insurance companies will be getting away from fixed (non cancelable policies). Most individual policies will still be guaranteed renewable, but premiums will be allowed to change. It is important to buy as much disability insurance as you need. If you can not afford the fixed premium plans, buy the step rated plans.

Benefit Period
Lifetime
Own Occupation (own occ)
Income Replacement
Integration
Accidental Benefits

This document was last modified on July 26, 1999

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