What Is a Guaranteed Renewable Disability Insurance Policy?

A disability insurance policy can give you the peace of mind of knowing you'll continue to receive a paycheck if you become disabled and cannot work for a long period of time.
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What Is a Guaranteed Renewable Disability Insurance Policy?

Written by Brian Greenberg

Last updated: September 19th, 2022

Reviewed by Paige Geisler

A guaranteed renewable disability insurance policy offers the added protection of knowing that as long as you keep paying your premiums on time, your policy can’t be canceled by the insurance company.

What is a Guaranteed Renewable Disability Insurance Policy?

A guaranteed renewable disability policy is a disability policy that cannot be canceled by the insurance company as long as the premium payments are kept up to date. Unlike a non-cancelable policy, however, a guaranteed renewable policy doesn’t have premium rates that are guaranteed to remain fixed forever.

At renewal time, the insurance company can raise the premiums on a guaranteed renewable policy, but only if the rate of increase is the same across the board for all policies of the same type and in the same risk class. In other words, an insurer can’t single out your policy for a rate increase.

Who Benefits From Guaranteed Renewable Disability Insurance?

If you rely on your income to support your family and ensure your bills are paid every month, you need a disability insurance policy to protect you in case an accident, illness, or injury prevents you from working and earning a paycheck. A guaranteed renewable policy offers an added layer of protection in that it can never be canceled by the insurance company as long as you pay your premiums. For instance, if you develop a medical condition that puts you in a higher risk class, the insurance company must continue providing coverage.

How Much Does Guaranteed Renewable Disability Insurance Cost?

Guaranteed renewable disability insurance typically costs between 1% and 3% of the income being insured. In other words, if you make $100,000 a year and want disability coverage on your full income, you’ll likely pay between $1,000 and $3,000 per year for a policy.

What determines whether your premiums are closer to the 1% or the 3% end of the range? Your age, your current health, and most importantly, the level of coverage you elect are determinants considered by the insurance company. Disability insurance policies can cover as low as 50% and as high as 80% of your annual income. Higher coverage amounts correspond to higher premiums.

What is the Difference Between Guaranteed Renewable Insurance and Non-Cancellable Insurance?

A guaranteed renewable insurance policy can’t ever be canceled as long as the premiums are paid, but the premiums can change. A non-cancellable policy is not only guaranteed to remain in force, but it also has guaranteed fixed premiums. Even if the health of the insured or the market changes, the premiums on a non-cancellable policy will never increase as long as they’re paid on time.

What is a Conditionally Renewable Disability Insurance Policy?

A conditionally renewable disability insurance policy is one that the insurance company has the option to cancel at renewal time under certain conditions. The insurance company might, for instance, require you to undergo a physical exam at renewal time to determine if there have been any significant changes in your health. If your health is worse than it was when you took out the policy, and the insurance company feels you now present too great of a risk, they might cancel your policy.

Where Can You Get a Guaranteed Renewable Disability Insurance Policy?

You can get a guaranteed renewable disability insurance policy from an insurance agent or broker, either locally or online. Make sure you read and understand the terms of any policy you’re considering before you commit to it, as subtle differences between policies can have a big impact on what’s covered when you file a claim.

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