Disability insurance is protection for your paycheck. There are many riders (policy add-ons) available to customize your coverage. The future increase option (FIO) is a popular rider of a long-term disability insurance policy.

It’s also known as future purchase option, guaranteed increased option, guaranteed purchase option, and guaranteed insurability option.

This rider allows you to buy more insurance periodically without having to go through medical underwriting and only providing financial evidence of insurability. This is important if you expect your income to increase in the future and if are in good health when you buy a policy, but your health deteriorates over time. You aren’t penalized for any future diagnoses because your health is not taken into consideration.

FIO riders allow you to increase your disability monthly benefit in the future.

Your ability to increase your coverage is based on the following:

  • Your income
  • Your total disability insurance cannot be greater than allowable levels (based on insurance company guidelines).
  • Medical underwriting is NOT required
  • Increases are only available at specific times (stated in policy)

The FIO rider will be structured differently depending on the company.

Differences you may see are:

  • Limitations on benefit increases at specific ages
  • Limitations on age when you can exercise those benefit increases
  • If benefit increases are available during a claim

For example, your policy may say you can exercise the full amount of this rider through age 45, on any given policy anniversary. Then on each subsequent anniversary date, ages 46 through 55, you can exercise 50% of the original base monthly benefit of the policy, provided you qualify financially. The total of all increases cannot exceed the amount purchased under the FIO. If you increase your coverage, your premium will increase as well.

Planning Tip

If you’re a young medical professional or new business owner, your future income will likely increase substantially. Using this rider, you can lock in rates when you’re young and healthy and then later increase coverage when you need more.

The Bottom Line

The future increase option rider is an important benefit to consider if you anticipate income increases after you buy a policy.