FIO vs BPR: Which Increase Rider Should a Physician Choose?

The Quick Answer

They differ in three ways. How often you can increase. How much total growth you get. What it costs.

Most doctors are better off with the three-year rider. Here's why, and when the other one wins.

The Choice a Resident Makes in Fifteen Seconds

A resident buying her first policy is thinking about two things. The monthly premium and the benefit amount.

Somewhere on the application there's a choice between two increase riders. It usually gets made fast, with very little thought.

That choice sets the ceiling on everything the policy will ever become.

Here's why it matters so much. The starting benefit isn't really the point of a resident policy. She buys $5,000 a month and will eventually need three or four times that. The rider is what gets her there without answering another health question.

So the question isn't which rider sounds better today. It's which one still works when she's 45.

What Both Riders Do

Start with what they have in common, because that's the valuable part.

Normally, buying more disability coverage means proving you're still healthy. Both riders remove that step.

When you increase your benefit, the company reviews your income, your job, and your other disability coverage. It does not review your medical history. Whatever has happened to your health since you bought the policy simply isn't part of the conversation.

That's the whole idea. The health you had on the day the policy was issued becomes the health the company keeps using.

For a doctor in her late twenties or early thirties, that's the most valuable thing in the contract. Medical history only piles up. A back surgery at 40. A new medication at 45. A finding on a scan at 50. Each one makes a new application harder. None of them affect an increase under one of these riders.

Both riders work the same way in a few other respects. Neither rider is a blank check. They remove the health question, not the income question.

The Three-Year Rider

Companies call this the Benefit Purchase Rider or the Benefit Increase Rider. The mechanics are the same either way.

Every third policy year, the company sends you a letter. It asks for your current income and any other disability coverage you have.

You send it back. The company reviews it and makes you an offer for more coverage.

You can accept the whole offer, part of it, or none of it.

Here's the condition that keeps the rider alive. You generally have to accept at least half of what's offered. Do that and the rider renews for another three years. Accept less than half, including accepting nothing, and the rider comes off the policy for good.

The offer is based on your income right now, measured against the company's limits. It isn't based on a pool set years earlier. That's the reason this version usually allows more total growth. There's no ceiling other than the company's own maximums.

It's also generally free.

You Don't Always Have to Wait Three Years

Most three-year riders include an early increase provision. If something big happens between review dates, you can usually apply right then.

That second one matters. A resident finishing training, a doctor joining a partnership, someone buying into a practice. Those are exactly the moments income leaps, and the three-year rider generally lets you act on them without waiting for the cycle.

Using an early increase doesn't cancel your next scheduled review either. And at most companies, if you apply early and then turn down the offer, the rider stays in force.

So the three-year cycle is the floor, not the ceiling. That's worth knowing, because "every three years" sounds slower than it usually is in practice.

The Annual Rider

Companies call this the Future Increase Option or the Future Insurability Option.

When you buy the policy, the company sets up a pool of extra coverage you have the right to purchase later. You can apply against that pool once a year instead of waiting three years.

The pool is usually about three times your base benefit for residents and fellows. For everyone else it's usually about twice the base benefit.

That's the pattern. The pool tends to squeeze residents and barely touch attendings, because residents start from a small base and grow the most.

The pool is also permanent. Once you've used it, the rider is done, and further increases mean full medical underwriting.

This version generally costs extra.

Side by Side

Both riders generally stop allowing new increases somewhere around age 55. Both are generally added when you buy the policy, not later. And a policy carries one or the other. Never both.

Why Most Doctors Choose the Three-Year Rider

Two reasons. The second one surprises people.

The first is cost. One rider is free. The other isn't.

The second is that the free one usually allows a higher benefit over a career. That runs against instinct. Every year sounds more flexible than every third year, so the annual rider sounds better.

But the annual rider is flexible inside a fixed pool. The three-year rider gets measured against your actual income every time, with no pool at all.

For a doctor whose income multiplies between residency and mid-career, that fresh measurement is worth more than the extra frequency.

It also fits how physician income actually moves. The big jump happens once, at the end of training. After that, income tends to grow in steps that a three-year cycle handles just fine.

What a Review Date Actually Looks Like

Here's the sequence.

Your third policy anniversary is coming. The company mails you a form. It asks for your current income and any other disability coverage you have. You have roughly a month on either side of the anniversary to send it back.

You return it. The company compares your income to its limits and makes an offer.

The new coverage is priced at your current age, so it costs what it costs at that age.

Then you wait three years and do it again.

That halfway rule is more generous than it sounds. In the example above, keeping the rider costs you the premium on $1,000 a month of extra benefit. That's a small price to keep the right to buy more coverage, with no health questions, for the rest of your career.

The One Real Risk

It isn't the cost. It isn't the halfway rule.

It's forgetting to send the form back.

That's the whole downside, and it's an administrative one. A doctor can do everything right for twelve years and lose the best provision in the contract because an envelope got buried during a hard month.

This is a big part of what we do for our clients. When a review date is coming, we send four emails. Then two texts. If we still haven't heard back, we call.

We'd rather be a little annoying in month thirty-five than explain in month thirty-seven why the rider is gone.

If you own one of these riders and nobody is tracking your review dates, fix that. It doesn't matter who sold you the policy. Put the anniversary on your calendar with a reminder sixty days out.

When the Annual Rider Is the Better Choice

The honest answer is that the case for it is narrower than it first appears.

The obvious argument is timing. If your income might jump, you want to act that year rather than wait. But the early increase provision on most three-year riders already covers the big jumps. Finishing training, joining a partnership, buying into a practice. Those generally trigger an early increase anyway.

So what's actually left?

What you're buying is timing. If your situation calls for it, that's something real.

But if your income climbs the way most physician income does, you're paying extra for flexibility you won't use. And if you're starting small, you're accepting a lower ceiling on top of the extra cost.

How This Plays Out Over a Career

Here's the usual path for someone who starts in training.

She buys a modest policy as a resident with the three-year rider attached.

When she finishes training and her income jumps, she buys as much as she can qualify for. That's the right move. It's also the biggest single increase she'll ever make, because at that moment she has a high income and almost no savings. That's exactly the situation disability coverage exists for.

After that, the increases are smaller. Her income grows in steps. The company measures it every three years. She takes the offer, or at least half of it.

By her forties she has far more coverage than she started with. And she never answered a health question after the original application.

That's the whole design. It only works if the rider stays in force. And the rider stays in force by returning a form every three years.

Frequently Asked Questions

The Bottom Line

Both riders solve the same problem. Your health at 30 is better than your health will be at 50. Coverage bought later has to survive whatever your chart says by then.

The three-year rider is free and generally allows more growth. The annual rider costs more and buys you timing inside a fixed ceiling.

Most doctors are better off with the first one. Nearly all of them are better off with either one than with neither.

And the real failure isn't choosing wrong. It's choosing well, then losing the rider to a form you didn't send back. Know your review dates.

Next Step

Chuck Krugh, CFP®, CLU®, ChFC®

Founder, DoctorDisability

Chuck Krugh, CFP, CLU, ChFC, is the founder of DoctorDisability, an independent brokerage that works exclusively with physicians and dentists on individual disability income insurance.

NPN: 2596505  ·  CA DOI License: 0B12796  ·  This article is educational and does not constitute a recommendation for any specific person. Rider names, pool sizes, acceptance rules, deadlines, and age limits vary by company and by state. Not every rider described here is available in every state or on every policy. These descriptions are general. Your own contract governs, and it is the document to read. Whether any particular claim qualifies for benefits is determined by the company under the terms of the issued contract.