Every insurance carrier offers the Future Increase Option riders, usually at a no extra cost to the policyholder. An FIO rider allows physicians to increase their disability coverage as their income increases over time. An FIO Rider is strongly recommended for all medical students, residents, or new physicians purchasing disability coverage.
FIO riders make disability insurance affordable even for physicians who are years away from their peak earning years. They also allow physicians to increase their benefit amounts without additional medical underwriting. When you first purchase a policy, your insurance carrier will pore through your medical history to identify any conditions that may increase your likelihood of becoming disabled. Depending on the severity of a condition, they may increase your premium costs, exclude certain conditions from coverage, or decline to offer you coverage altogether. FIO riders allow you to purchase increased coverage regardless of any medical conditions that may arise after the policy’s effective date. Consider the following scenario:
Dr. Rodriguez, a 27-year-old medical resident, purchases a disability insurance policy with an FIO rider. She can’t afford much coverage, so the policy starts with $125/month premiums for a $3,500/month benefit in the event of a disability.
During her first year as an attending physician, Dr. Rodriguez is diagnosed with Crohn’s disease, which puts her at a higher risk of becoming disabled. Six years later, Dr. Rodriguez has a young child and a mortgage payment. She would need substantially more than $3000 to supplement her lost salary in the event of a disability. However, now she can afford to pay higher premiums (still totalling only 1-3% of annual income) in exchange for a larger disability benefit.
Without an FIO rider, Dr. Rodriguez would have to go out and buy a new policy to purchase increased coverage. Due to her Crohn’s disease, she may be unable to find a carrier who will underwrite her medical condition for a new policy. Fortunately, with an FIO rider, Dr. Rodriguez can increase her coverage on the original policy without fear of losing protection.
FIO riders are a crucial provision to provide scalable coverage without additional medical underwriting. Many physicians increase their coverage after major events such as promotions, marriage, or having children. Read more about FIO riders and Benefit Update Riders.
Available Options
- Guaranteed Insurance Option (GIO)
- Future Increase Option (FIO)
Less Flexible: These free options allow you to increase coverage later on without doing additional medical underwriting. However, you can only increase with these features 1-time per every 3-year window. If you have not submitted paperwork to increase by the 3rd year of a 3-year window, you will be required to in order to keep this feature on the policy for another 3 years. The amount of increase available is based on the current maximum policy benefit.
Available Options
- Benefit Purchase Rider (BPR)
- Benefit Update (BU)
- Benefit Increase Rider (BIR)
