Future Income Option (FIO) is a disability insurance rider that gives you the contractual right to increase your policy coverage as your income grows, without undergoing medical underwriting
Future Income Option (FIO): Disability Insurance For Doctors Explained
Right, Not Obligation, To Buy More Insurance in the Future
The Future Income Option (FIO) or future increase option is a critical component of disability insurance for doctors, particularly those practicing in Ontario. This article delves into the intricate details of FIO, explaining its importance, how it works, and the benefits it offers to doctors. The aim is to provide a comprehensive understanding of FIO and its role in disability insurance for doctors.
Disability insurance is a crucial safety net for doctors, given the physical and mental demands of their profession. It provides financial protection in the event a doctor becomes unable to work due to injury or illness. FIO is a unique feature of disability insurance that allows doctors to increase their coverage as their income grows, without having to provide evidence of insurability. This feature is particularly beneficial for doctors early in their careers, who expect their income to rise significantly in the future.
Understanding Future Income Option (FIO)
The Future Income Option (FIO) is a rider or an add-on that can be included in a disability insurance policy. It allows the policyholder to increase their disability insurance coverage in the future without having to undergo further medical underwriting. This means that even if a doctor's health changes, they can still increase their coverage to match their increased income.
Typically, when a person wants to increase their disability insurance coverage, they must provide evidence of insurability, which often involves a medical examination. However, with the FIO, doctors can bypass this requirement. This is particularly beneficial for doctors who may develop health conditions over the course of their careers that could otherwise make it difficult for them to increase their coverage.
How FIO Works
The FIO allows doctors to increase their disability insurance coverage at specified intervals, usually annually, on the policy anniversary. The amount of increase is typically based on the increase in the doctor's income. However, there is usually a maximum limit to how much the coverage can be increased.
It's important to note that while the FIO allows doctors to increase their coverage without medical underwriting, they still need to provide proof of their increased income. This is to ensure that the increased coverage is in line with their income, as disability insurance is designed to replace a portion of lost income in the event of a disability.
Benefits of FIO
The primary benefit of the FIO is that it provides doctors with the flexibility to increase their disability insurance coverage as their income grows. This is particularly beneficial for doctors early in their careers, who expect their income to rise significantly in the future.
Another key benefit of the FIO is that it allows doctors to increase their coverage without having to undergo further medical underwriting. This means that even if a doctor's health changes, they can still increase their coverage to match their increased income. This can provide peace of mind and financial security for doctors, knowing that they can maintain adequate disability insurance coverage throughout their careers.
Factors to Consider When Choosing FIO
While the FIO offers many benefits, there are several factors that doctors should consider when deciding whether to include this option in their disability insurance policy. These factors include the cost of the FIO, the expected growth of their income, and their health status.
The cost of the FIO is an important consideration. While it provides valuable benefits, it also adds to the premium of the disability insurance policy. Doctors should weigh the cost against the benefits to determine if the FIO is a worthwhile addition to their policy.
Expected Income Growth
The FIO is particularly beneficial for doctors who expect their income to grow significantly in the future. Therefore, doctors should consider their expected income growth when deciding whether to include the FIO in their disability insurance policy.
For example, a doctor early in their career who expects their income to rise significantly over the next few years may find the FIO to be a valuable addition to their policy. On the other hand, a doctor nearing retirement, who does not expect significant income growth, may not find the FIO to be as beneficial.
Health Status
Another factor to consider is the doctor's health status. If a doctor has a health condition that could make it difficult for them to increase their disability insurance coverage in the future, the FIO can provide a valuable safety net.
However, if a doctor is in good health and does not expect their health to change significantly, they may not need the FIO. It's important for doctors to consider their individual health circumstances when deciding whether to include the FIO in their disability insurance policy.
How to Obtain FIO
The FIO is typically offered as a rider or an add-on to a disability insurance policy. Therefore, doctors who wish to include the FIO in their policy should discuss this option with their insurance provider or broker.
It's important to note that not all disability insurance policies offer the FIO, and the terms and conditions of the FIO can vary between policies. Therefore, doctors should carefully review the policy details and discuss any questions or concerns with their insurance provider or broker.
Application Process
The application process for the FIO typically involves providing proof of income and agreeing to the terms and conditions of the FIO. The insurance provider may also require a medical examination as part of the initial underwriting process for the disability insurance policy.
Once the FIO is included in the policy, the doctor can increase their coverage at the specified intervals, usually annually, by providing proof of their increased income. The insurance provider will then adjust the coverage and premium accordingly.
Cost of FIO
The cost of the FIO is typically added to the premium of the disability insurance policy. The exact cost can vary depending on several factors, including the doctor's age, health status, and the amount of coverage.
It's important for doctors to consider the cost of the FIO when deciding whether to include this option in their policy. While the FIO provides valuable benefits, it also adds to the cost of the policy. Therefore, doctors should weigh the cost against the benefits to determine if the FIO is a worthwhile addition to their policy.
Future Income Option (FIO) and Disability Insurance for Doctors: Conclusion
The Future Income Option (FIO) is a valuable feature of disability insurance for doctors, particularly those practicing in Ontario. It provides doctors with the flexibility to increase their disability insurance coverage as their income grows, without having to provide evidence of insurability. This can provide peace of mind and financial security for doctors, knowing that they can maintain adequate disability insurance coverage throughout their careers.
However, the FIO is not a one-size-fits-all solution. Doctors should consider several factors, including the cost of the FIO, their expected income growth, and their health status, when deciding whether to include this option in their disability insurance policy. By carefully considering these factors, doctors can make an informed decision that best meets their individual needs and circumstances.
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Disability Insurance is Complicated
Here are answers to frequently asked questions...
No, the only thing you will ever pay is a premium to the insurance company that provides the disability insurance policy for you.
Yes, we have access to various discounts based on your income, your affiliation with a specialty association and other factors. These discounts will be determined and applied during your quote request process
Rates are based on your age, health history, smoking status, gender and income. The insurance company also compares and makes assessments based on similar individuals with the same profile like age, gender, smoker status, specialty and province of practice. Unlike association rates which are based on the claims of the whole group i.e. your rate is affected by someone who smokes even if you don't smoke, or if you neve claim and other claim multiple times, for example.
We simplify the process knowing how busy doctors get and need flexibility. The first step is simply to request your quotes and getting a sense of the cost and coverage available. Next, we compare the policy options and other riders like Own Occupation and discuss what makes sense for you and answer your questions. Lastly, you apply and buy risk-free.
Yes you can increase it and that is our recommendation. Anywhere you do residency in Canada for example, you’re automatically enrolled in a health-benefits plan, which includes disability insurance coverage. As a resident you can purchase a private disability policy under the Medical Student Offer for example. The benefit of this is that you don't have to go through a medical examination to qualify.
The more relevant clause is what's called "Future Income Option" which gives you the option in the future to buy more disability insurance if your income increases, without having to worry about your health having changed just in case. The monthly benefit and premium will depend on your new income, age, and province you’ll be practicing. The process is simple and will not require you to undergo medical underwriting.
In most cases, it can take between 1-3 months from beginning to end. A lot of the time may depend on follow up information required by the insurance company. In our experience 1 month is usually a standard timeframe.
As an independent insurance broker we have no affiliation with any one insurance company. We know which insurance company is most suited for the type of disability insurance policy that is most conducive for doctors. As a broker we get a finders fee from these insurance companies and they are all the same, without any financial conflict of interest either.
Underwriting is where the insurance company verifies your information that you submitted on the application your complete with us and gathers additional details such as health history , travel, and personal history to determine the best rate possible.