How to Insure Your Income: Life Insurance and Cashvalue Provisions
While income insurance policies do not typically accumulate cash value or have a life insurance component, it is possible to purchase riders to a policy that provide benefits similar to life insurance.
An annual renewable term life insurance feature may be attached to a disability income policy, providing a death benefit, as well as disability income coverage.
Similarly, a return of premium rider may be attached to a disability income policy. This rider provides for the return of a percentage of premiums paid (usually 80 percent) during a specific term period (usually every 10 years), minus the claims paid during the term period. The refund is made every 10 years and at age 65 or as of the date of death. Essentially, for an additional premium, you get 80 percent of your money back either in claims, premium refunds or a combination of the two.
Various settlement options are offered for receiving the premium refund. Amounts left on deposit with the insurance company earn interest and constitute cash value, or may be applied toward future premium payments.
