GLOSSARY OF DI DEFINITIONS
Automatic Increase rider (AIR)
This rider automatically increases the monthly benefit by a percentage(usually 5%) for a five year period. Some carriers will allow you to renew the 5 year period with financial underwriting.
Capital Sum or Principal Sum Benefit
This rider pays a lump sum of the monthly benefit for the loss of use of one limb, sight in one eye or speech. It is usually paid in addition to any other benefits on the policy.
Catastrophic Disability Rider (Cat Rider)
This rider pays an additional monthly benefit for truly catastrophic claims. The triggers are usually the needing of assistance with activities of daily living like eating, transferring, bathing, toileting, continence or cognitive impairment.
Cost of Living Adjustment(COLA)
This rider increases your monthly benefit to fight inflation while receiving benefits on claim.
This is deductible or the amount of time one must wait to collect on the policy.
This provision guarantees the policy will be renewed but the rates could be raised if by a class of insured's.
Non-Cancellable and Guaranteed Renewable
This states that a policy may not be cancelled (except for non-payment of premium) or rates increased to a specified time period. In essence this freezes the premium on a policy.
Own Occupation Rider
This rider allows you to be disabled from your occupation and work in a new field with no benefit reduction.
The measure of your earnings just prior to your disability. Usually the best 12 months of income in the last 24 months is the formula used to calculate the figure.
This rider pays if you lose the use of two limbs, sight, hearing or speech. The rider usually pays even if you go back to work in your occupation.
Purchase Option (APB, GIO FIO, FPO or Benefit Update)
These are abbreviations for provisions that allow for a policy to increase the monthly benefit with only financial underwriting.
This feature, if agreed to by both the insured and carrier, provides additional funds to rehabilitate a claimant.
This rider pays you a percentage of your benefit if you are partially disabled. The amount is calculated based on your loss of income.
After the elimination period has been satisfied a policy will consider recurrent periods of disability to be one continuous period of disability if they result from the same cause or causes and are not separated by a recovery of more than 6 or 12 months.
Transitional Own Occupation Rider
This rider like the own occupation rider allows you to collect benefits on your policy and work in a new field. This rider limits the amount on claim you can collect from your new job and disability benefits to 100% of your pre-disability earnings.
This means the client is collecting full benefits on the policy and is unable to perform the major duties of their occupation.
Waiver of Premium
Typically this begins after 90 days of disability and keeps the policy from requiring premium payments while on claim.