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| Optional
Riders - Features you can add to a base policy for additional protection. |
Optional Riders Available
| COLA - Cost of Living Adjustment |
| FIO - Future Increase Option |
| AIR - Automatic Increase Rider |
| Group LTD Replacement |
| Residual Disability Insurance |
| SIS - Social Insurance Substitute Rider |
Cost of Living Adjustment
Often referred to as a COLA rider, this rider only kicks in if you actually
go on a disability insurance claim, and then only if the disability lasts
for more than one year. Depending on the percentage option you elected when
you took out the policy, it will increase your monthly benefit every year
while you are on a claim along with the CPI up to the maximum you elected.
It is quite often the most expensive rider available on a disability insurance
policy. I normally do not recommend this option to people over the age of
42. It is designed to protect you against inflation, at after age 42 you
are not as much at risk for inflation as you were in your younger years.
I would recommend saving your money here unless you are younger, and must
have this option because a permanent disability would devastate you.
Future Increase Option
The is an optional rider offered by most carriers to protect your future
earnings. Without this rider, or an automatic increase rider, there is no
way to protect your future earnings. A disability insurance policy by itself
only protects the amount of income that one makes at the time they take
out the policy. It does not grow automatically unless you have this, or
an automatic increase rider. This rider locks in/guarantees your insurability
for a certain period of time (normally to age 55). So as you increase in
age, and increase your income level, you can increase your monthly benefit
regardless of any health changes. Usually the only thing you need to provide
when increasing your monthly benefit is a copy of the most recent tax return
to prove your new income level. But the most important thing this rider
protects is all the money you may make in the future. The worst thing that
could happen to you is to take out a small disability insurance early on
in life, with no future increase option. Then ten years down the road there
is a change in your health history that prevents you from getting anymore
disability insurance. You'd be real upset that you did not get future increase
option then.
Automatic Increase Rider
This is a simple rider that serves a simple purpose. It increases your total
monthly benefit each year for about five years. Your premium will go up
with this rider each year because you are buying more disability insurance
coverage. Generally they give you about a 25% increase in coverage over
five years. The idea is to have your coverage increase with inflation over
time without you having to pay attention to it. In terms of recommending
this rider, it is simply a choice for you to make. If you want your coverage
to increase, then get it.
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