Question

Johnson White is considering the purchase of a disability income policy and is trying to decide between two policies sold bhy two different companies.Although both will pay until age 65 for disability arising out of sickness, and for lifetime for disability resulting from accident;the cost of one policy is almost twice that of the other.What provisions in the two contracts would you advise White to compare?

Answer 1

The few important points that needs to be compared are as follows:

• Clause for presumptive disability: It is important to understand if both the policies have got similar clauses related to protection against disabilities which occur drastically. If the lower premium policy does not have this feature then the policy is inferior to the other policy inspite of having a lower premium.
• Recurrent disability clause: The insurance should protect the insured from any occurrence of event which causes a recurrence of disability which has been cured. So a cheaper premium should not come at the expense of removal of this clause.
• Discretionary clause: The insured should carefully read the discretionary clause in the contract as a lop sided clause implies that the insurer is having the discretion to reject any claim arising out of the policy and this may result in a cheaper but effectively worthless policy.