One of the most important factors to consider when looking for disability income insurance is which riders are offered, and how good those particular riders are in the context of the policy.
But before we get into the particulars of the riders and have specific life insurance riders explained, let’s talk about exactly what a rider is.
Riders are basically optional provisions that come with disability insurance policies to help give you extra protection and benefits.
They generally come with an increased cost, and you generally have the option of either taking them or leaving them.
So in this blog post, you’re going to learn about some of the most common disability riders, what they mean, and what they actually provide.
This will help you to choose disability insurance that’ll empower you to select coverage options that’ll equip you for success in the event that you actually suffer from a disability that keeps you from being able to work.
Let’s dive into it.
1. The Future Increase Option
This rider option basically gives you the ability to increase your coverage in the future (as your income increases) without requiring you to go through another medical exam or proof of insurability.
2. A Basic Partial Disability Benefit
This rider allows you to pull partial benefits if you get injured without being completely disabled—to the point that your work is limited, but not impossible.
3. A Cost Of Living Adjustment Rider
LeverageRX describes a cost of living rider as such:
“An optional add-on to a long term disability insurance policy that will help any benefits that you are paid keep pace with inflation in the event that you become disabled. If your policy has this rider, your benefits will increase annually, typically starting after you’ve been disabled for 12 months.”
This rider is really important because it’ll empower you to keep earning livable benefits (instead of being slowly scaled out of being able to afford your lifestyle while on disability insurance).
4. Student Loan Protection Rider
This type of rider helps to provide extra money in the event of disability, to help cover student loan payments.
Unfortunately, student loan payments can’t be paused just because you get injured. Therefore, bond insurance protects you if your student loans threaten to eat up all of your disability benefits each month.
5. A Lump Sum Disability Rider Benefit
This particular type of rider is offered only by Guardian, and provides a ‘bonus’ benefit at the age of 60 equal to 35% of all the total and/or partial benefits paid until that age, to make up for the lost savings you would incur during a period where you were forced to live on disability earlier in your career.
6. A Retirement Protection Rider
This type of rider was designed to help you protect retirement savings.
It accomplishes this by replacing the contributions you would have made to your retirement contribution plan while totally disabled.
This rider is incredibly useful for people who want to protect their retirement plan from the potential for disaster in the future due to some unforeseen disaster or injury that could lead to disability.
7. Catastrophic Disability Benefits Rider
This rider provides up to 100% income replacement in the event that you suffer an injury or disaster that renders you functionally impaired or irrevocably disabled on a permanent basis.
Some companies also add a cost-of-living adjustment to this benefit, as it is a long-term benefits option that can be rendered less useful over time due to inflation.
Which Disability Income Insurance Riders Should You Get?
Here’s the thing.
All of these riders probably cost extra.
So you need to be a little bit careful about how you spend your money.
You may never need any of them.
But if you DO end up needing them, it’s certainly better to have them than to NOT have them.
So, it really all comes down to a simple cost-benefit analysis.
You’ll want to compare the prices of the riders to what you would stand to lose in the event of a disability, and try to plan out how protected you already are in the event that some kind of disaster occurs—rendering you unable to work (either just for now, or forever).
Obviously, it’s difficult to say with complete certainty whether or not you should consider getting one or more of these riders.
This is a choice that’s probably best discussed with a professional financial planner.
Conclusion
Hopefully, this post has helped you to understand a bit more about the common disability income insurance riders that you may encounter while shopping for insurance.
Good luck!
Hopefully, you’ll never need any of them. But it’s always better to be safe than sorry.