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Optional Riders for Disability Insurance Policies

Optional Riders - Features you can add to a base policy for additional protection.

Optional Riders Available

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 generally recommend saving your money here unless you are younger, and must have this option because a permanent disability could devastate you.

Future Increase Option

The is an optional rider offered by most carriers 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. One thing to think about is if you 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. 

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.

These are the personal views of the author and do not necessarily reflect the views and opinions of The Guardian Life Insurance Company of America or its subsidiaries and affiliates thereof.

Optional riders are available for an additional premium.