Future Increase Option (FIO)

In the context of Disability Insurance in Canada, the "Future Increase Option (FIO)" is a policy feature that allows policyholders to increase their disability insurance coverage amount at specific times without providing additional medical evidence of insurability. This option is designed to help policyholders maintain adequate coverage as their income grows, ensuring that their disability benefits will align with their current earnings if they become disabled.

Key aspects of the Future Increase Option (FIO) include:

• Guaranteed Insurability: Policyholders can increase their coverage without undergoing new medical examinations or underwriting. This is particularly beneficial for individuals who anticipate changes in their health status or who want to avoid the risk of future insurability issues.
• Scheduled Opportunities: The option to increase coverage is typically available at predetermined times, such as policy anniversaries. The insurance provider outlines these opportunities in the policy contract.
• Income Growth Alignment: The FIO helps ensure that the insurance coverage amount keeps pace with the policyholder's increasing income, providing a safeguard against potential income loss due to disability.
• Policy Conditions and Limits: There are usually specific conditions and limits on how much additional coverage can be purchased and the frequency of increases. These conditions are defined in the insurance policy, often with a maximum allowable increase per option exercise.
• Additional Premiums: When the coverage amount is increased, the premiums will also increase accordingly based on the insured's age at the time of the increase and the additional amount of coverage purchased.

The Future Increase Option (FIO) is a valuable feature for policyholders looking to protect their future earning potential without worrying about changing health conditions that could affect their insurability. This option ensures that disability coverage remains sufficient over time, adapting to changes in the policyholder’s financial and personal circumstances.