Overview: While mandatory provisions protect the insured, optional provisions primarily protect the insurer's financial interests. Insurers include these provisions when the policy type or applicant profile warrants the additional underwriting control they provide.

Unlike mandatory provisions — which the insurer must include — optional provisions are tools the insurer may choose to deploy. Each addresses a specific risk-management concern. The table below summarizes all 11; the discussion that follows explains the most important in depth.

Optional Provision	What It Does	Why Insurers Include It
Change of Occupation	Adjusts benefits (or premiums) if the insured shifts to a more or less hazardous job	Aligns premium with actual occupational risk
Misstatement of Age	Adjusts benefits to what the premium would have purchased at the correct age	Ensures actuarial fairness without voiding the policy
Other Insurance with This Insurer	Limits total payout when the same insurer issued multiple policies	Prevents "stacking" of benefits with one company
Insurance with Other Insurers (Expense)	Pro-rates benefit payment when multiple insurers cover the same medical expense	Prevents overpayment across companies
Insurance with Other Insurers (Income)	Pro-rates disability income benefits with other carriers	Prevents disability from paying more than earned income
Relation of Earnings to Insurance	Reduces disability benefits if total benefits exceed current earnings	Eliminates financial incentive to remain disabled
Unpaid Premium	Allows deduction of overdue premium from claim payment	Recovers owed premiums without a separate collection action
Cancellation	Permits the insurer to cancel the policy with written notice	Provides exit from deteriorating risks (restricted by ACA for major medical)
Conformity with State Statutes	Automatically amends any policy language that conflicts with state law	Keeps the policy legally valid across jurisdictions
Illegal Occupation	Excludes losses arising from the insured's commission of a felony	Bars coverage for criminally-caused harm
Intoxicants and Narcotics	Excludes losses while the insured is intoxicated or under narcotics (unless prescribed)	Reduces moral hazard from voluntary impairment

Change of Occupation

This provision addresses a real underwriting problem: the person who signs up as an office manager and then three years later takes a job as a commercial roofer. The insurer priced the policy for sedentary, white-collar risk. If a claim arises after the occupation change, the insurer recalculates the benefit to what the premium paid would have purchased at the new, higher-risk classification — typically a lower benefit amount. The provision works symmetrically: if the insured moves to a less hazardous job, the insurer must reduce the premium going forward (and refund the difference).

Misstatement of Age

Unlike a material misrepresentation (which could permit rescission), a misstatement of age is treated as an administrative error to be corrected rather than a fraud to be punished. If the insured stated they were 38 when they were actually 42, the insurer does not void the policy. Instead, it adjusts the benefits to what those premiums would have purchased for a 42-year-old. This provision remains contestable beyond the two-year incontestability period — the insurer can make the age correction at any time, even decades later, including when processing a final disability claim.

Relation of Earnings to Insurance (Average Earnings Clause)

This provision deserves particular attention because it directly enforces the principle of indemnity in disability income insurance. If the total monthly benefits from all disability policies a person holds — from all insurers — exceeds their actual monthly earned income (or their average income over the prior two years, whichever is greater), the insurer reduces its benefit proportionally. The excess premium for the over-insured portion is refunded.

The rationale is straightforward: if a person can earn more money by being disabled than by working, the financial incentive to recover and return to work is eliminated. This provision protects the integrity of disability insurance as an income-replacement product rather than a profit-generating one.

Cancellation

The cancellation provision allows the insurer to terminate the policy with advance written notice (typically five days) and a pro-rata refund of unearned premium. Historically used to exit high-risk policyholders, this provision's practical scope has been significantly narrowed by the ACA, which prohibits cancellation of comprehensive individual major medical plans based on health status. The provision remains relevant for disability income, dental, limited-benefit, and short-term health plans.

Conformity with State Statutes

Because insurance is regulated at the state level and laws change, this provision serves as an automatic compliance mechanism. If any policy clause conflicts with the law of the state where the insured resides, that clause is automatically amended to conform to the state's minimum requirements. This protects the insurer from having an unenforceable contract and protects the policyholder from being stuck with terms weaker than what the law requires.