The longer the benefit period of a disability income policy

In a disability income policy, the benefit period refers to the length of time that benefits will be paid to the insured if they become disabled and unable to work. A longer benefit period generally indicates that the insurer will be responsible for making payments over a more extended timeframe in the event of a claim.

Consequently, the insurer takes on greater risk with longer benefit periods, as they may have to pay benefits for a more extended duration depending on the severity and length of the policyholder's disability. To compensate for this increased risk, insurance companies typically charge higher premiums for policies that have longer benefit periods. Thus, a longer benefit period leads to an increase in the policy's premium, making this statement accurate.

In contrast, options that suggest a lower premium or reduced benefits do not account for the financial implications of providing ongoing support for extended periods. A longer coverage duration necessitates a more substantial financial commitment from the insurer, which is reflected in the premium cost.