If you have done your reading about disability income insurance (or any other kind of insurance coverage), you’ve probably run across the term “insurance rider,” and wondered what riders are and how they work. We’re going to demystify them for you and then highlight three riders that are available for most disability income insurance policies.
What is a Rider?
An insurance rider is additional coverage that can be added to an existing insurance policy, which is useful to people who have certain needs that are not met by typical coverage. The cost of a rider is not fixed, but is instead determined based on your circumstances.
Riders are often beneficial because (depending on the rider), they can save you from having to buy an additional policy to get the rider’s specific provision, and some riders offer you the chance to purchase more coverage in the future.
The kinds of riders available to you depend on the type of insurance coverage (for example, automotive, disability income, health, or life insurance). You might find some riders useful, and others less-so, so be sure to read through any offered riders to make sure that you add to your policy only ones that might be beneficial to you, while not purchasing any that you don’t feel are pertinent to your needs. As one example, a rider can be added to disability income insurance coverage that gives you inflation protection, which would enable you to receive a cost-of-living adjustment for each year your policy is in force.
Common Riders to Add to Your Policy
Only add a rider if you feel it will benefit you should you need to file a claim, your agent should be able to advise you on this front. Here are three kinds of riders offered by some companies that provide additional coverage with their disability income insurance policies.
Own Occupation Rider: This rider changes the definition of total disability. Under this rider, full benefits are payable even if the doctor returns to work in a new occupation.
Partial/Residual Disability Rider: This rider provides for proportion to loss of income benefits when a doctor is disabled but still working in his/her practice but losing income.
Future Insurability Option: This rider protects your ability to purchase additional coverage in the future without having to prove good health.
Cost of Living Rider: In the event of a disability, this rider provides for an annual increase in your monthly disability benefit to help keep pace with inflation.Increases may be at a specified amount or tied to an index such as the consumer Price Index.
Retirement contribution protection: This rider can pay your retirement contributions while you are receiving disability insurance benefits.
Student loan protection: The rider can pay your student loan bills while you are receiving your insurance benefits, which means that you won’t need to use some of your benefit payment for those bills.
Catastrophic illness protection: Even if you are not working due to one disability, that does not mean that you are safe from developing an illness or sustaining an injury. This rider can provide you with an additional monthly amount over and above your regular monthly benefit so that you may be able to pay the additional bills incurred as a result of this new illness or injury.
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