Disability income insurance

A reader sent to me a brochure about a disability income insurance called PaySecure. It shows an example for a person aged 30 insuring for $3,000 a month payable on disability (excluding the first 90 day) until age 55. The monthly premium is about 1% of the insured sum, i.e. about $30. The premium rate is not guaranteed and may be adjusted based on future experience.

The features of this plan looks quite satisfactory, but it is better for the consumer to get a benefit illustration of this plan specific to your age and personal circumstances. You can send the benefit illustration to me.

The consumer should also ask the insurance company to provide the loss ratio (i.e. the ratio of claims paid to the premiums received). If the loss ratio is 60% to 70%, the insurance is fairly priced. This method is explained in my book, Practical Guide on Financial Planning. If the insurance company refuses to provide this information, you should not buy the product as you may be unfairly charged.