“Guaranteed-renewable” and “non-cancelable” are policy features: guaranteed-renewable means your disability insurance policy will renew as long as you keep paying your premiums, and non-cancelable means your rates will stay the same for the length of the policy. If your policy is both non-cancelable and guaranteed renewable, then your disability insurance locks-in and your rates and benefits will stay the same as long as you keep the policy.
Sometimes they’re non-cancelable and guaranteed renewable are separate policy upgrades and have to be added individually, but some disability insurance companies bundle them together or offer them with every policy.
What does guaranteed renewable mean?
“Guaranteed-renewable” is a built-in feature of most types of disability insurance that lets you renew your coverage every year (or every time your policy term is up) as long as you pay your premiums on time. It also usually means you can renew without taking another medical exam.
A guaranteed-renewal policy means the terms of your coverage will stay the same (so your benefit amount and maximum benefit period) even if your health changes.
But guaranteed renewable doesn’t mean your rates will stay the same, it just means you can renew your policy. Your rates can still go up if an increase is approved for all people with a certain job, lifestyle, or health class.
Guaranteed vs. conditionally renewable disability insurance
Guaranteed-renewable policies are common for disability insurance, but sometimes coverage is conditionally renewable. With conditionally renewable coverage, there are exceptions to when you can renew your policy, for example you may not be able to renew your disability insurance if your lifestyle or career changes.
Conditionally renewable disability coverage is cheaper, since there’s no guarantee you’ll be able to renew your policy every year — but it’s a risk — it may not be worth having coverage that you can’t keep long term.
What does non-cancelable mean?
Non-cancelable disability insurance means that your insurance company can’t raise your rates or cancel your policy. Your rates will only change if you adjust the policy, like by adding more coverage.
To get non-cancelable disability insurance you have to add a non-cancelable rider to your policy — it’s usually not included automatically like guaranteed-renewable coverage.
The cost of adding a non-cancelable rider varies, but we found that it can increase your rates by as much as 16%.
Why you need guaranteed-renewable and non-cancelable disability insurance
Having disability insurance that’s both guaranteed-renewable and non-cancelable gives you the most secure coverage. Your rates will stay the same as you age and you’ll have coverage for as long as your policy lasts.
If your policy is only guaranteed-renewable but not non-cancelable, your rates can still go up. A surprise cost increase — especially if it’s a large increase — could make it harder to save for retirement and cover your basic expenses.
Other disability insurance policy terms to know
Your policy’s renewability is just one important feature. Other terms that describe how your disability insurance works include:
Elimination or waiting period: The amount of time after a disability that you have to wait before you can start to receive any benefits.
Type of premium: Level premiums stay the same over the lifetime of your policy, while graded or stepped premiums go up as you age.
Benefit period: The maximum length of time that you can collect benefits if you’re disabled. Usually you can choose between 1, 2, 5, or 10 years, or until retirement age.
Definitions of disability: The rules for when you can receive benefits based on how a disability affects your ability to do your job — most policies are either any-occupation or own-occupation coverage.
→ Read about what other common terms in disability insurance mean
What to look out for when you’re shopping for coverage
On the surface, it seems straightforward: get guaranteed-renewable and non-cancelable disability insurance, then you’ll have the same coverage at the same price every year as long as you pay your premiums on time.
But things can get more complicated when you read the fine print of different disability insurance policies. Here are some things to look out for when you’re shopping for coverage:
What costs extra: Some insurance companies include both non-renewability and non-cancelability together in the starting price of a policy without requiring you to add either one.
Whether you’re eligible: Your occupation or health history may disqualify you from being able to get a non-cancelable policy.
How your coverage will change as you get older: Some insurance companies let you extend your coverage to a later age in exchange for switching to conditional renewability.