Age and Time Limits to the Application of the Clause

A necessary part of any disability clause is that which states the time when the risk begins, the circumstances under which it remains in force, and the time when it ceases to be effective, if at all. Benefits are usually promised "if the insured, while less than sixty years of age, after the first premium has been paid to the company on account of this policy, shall furnish due proof to the company, while the policy is in full force and effect," that he is disabled. The risk begins in this case as soon as one full annual premium has been paid. A few clauses require the payment of two or even three premiums. This is equivalent to maintaining a probationary period of one or two years between the beginning of the life insurance and of the disability insurance. Most clauses, as the above, continue the disability insurance while the policy is in full force and effect. Some state that there must be no default in the payment of premiums. The question that arises here is whether in the event of the lapse of the policy through default in premiums the disability protection, stands on the same footing as the life insurance. Most policies allow thirty days of grace for the payment of premiums and some upon request by the insured allow the premiums to be paid automatically thereafter from the reserve. The question is, will the disability benefits be continued on the same terms? In many cases there is no way of answering this question from the phraseology of the clause. The few references to the period of grace in premium payments, if definite, usually continue the disability insurance during this time, although cases to the contrary exist. One clause gives the company the option of cancellation within the period of grace following any anniversary of the contract. The most liberally drawn contracts state that the clause operates "while the policy is in full force and effect", as above, or "during the continuance of the policy." This phraseology puts the life and the disability protection on equal terms.

A very few policies limit the operation of the disability clause to the time during which premiums are paid. Thus in a twenty-payment life policy, the disability insurance lasts for only twenty years. This would be of no significance if the waiver of premiums were the only benefit granted, but the fact is in every instance of this sort the policy matures upon disability and is paid in some form to the insured. This limitation constitutes a serious indictment of the clauses in which it is found.

In the clause quoted above benefits are paid only where disability occurs before the insured is sixty years of age.

This, or an equivalent, age limitation is found in a large majority of these contracts. This appears at first glance to be objectionable. The man who wants disability insurance wants protection throughout the entire period of his life. The main reason why the limitation exists is probably the fact that our actuarial information regarding the chances of disability after age 60 is so imperfect that insurance of the risk is largely guesswork. But there is a more fundamental reason why protection is not needed after approximately this age. The clause stands as a guarantee that the permanence of a man's insurance will not be endangered by his becoming disabled. The "insurance" period of life, however, is the period of productivity, and it does not extend ordinarily beyond sixty or sixty-five years of age. In other words, by this time the average man retires from active business or professional life and his later years are, or should be, cared for by the accumulations previously made. There is no special reason, therefore, why disability insurance should cover this later period.

Many of the clauses which set an age limit have not, how[ ever, left the insured entirely without protection during the later years. Provision is made whereby, if disability occurs after the age limit has been reached, the premiums thereafter becoming due will be allowed to accumulate as a lien against the policy without interest. This is a highly commendable practice. A few companies issue clauses to apply without age limit.