Disability Insurance Policy Riders

Policy Riders are enhancements that can be added to a disability insurance policy to protect you from additional risks associated with being disabled. The following is a list and general description of policy riders that are offered by most insurance carriers.

Residual Disability (this may be referred to as Partial Disability in California)
Adding a residual disability rider to your policy will expand the definition of disability to include a "partial" disability. Although the specifics of this rider will differ with each insurance carrier you consider, it typically provides a partial benefit when your earnings are reduced by at least 15-25% as a result of an injury or illness.

Cost of Living Adjustment - COLA
The COLA rider is intended to protect you from the risk of inflation. Beginning after one full year of disability, your benefit will increase by 3-6%, every year that you are disabled and receiving benefits. This increase in benefit is intended to protect the purchasing power of your benefit throughout a Long-term disability.

Future Increase Purchase Option
This rider gives you the ability to increase your monthly benefit at a later date without having to re-qualify medically. You are able to increase your level of coverage at the policy anniversary, by simply showing financial documentation (W-2, 1040) that warrants the increase in coverage.

Catastrophic Disability
This rider allows you to purchase an additional benefit amount that will be paid if you are catastrophically disabled. Catastrophically disabled means you have a complete and irrecoverable loss of sight in both eyes, hearing in both ears, speech; or the use of both feet, both hands, or one foot and one hand. Traditionally you will also be considered catastrophically disabled if you are totally disabled and have Alzheimer's Disease or other irrecoverable forms of dementia or senility; Paraplegia or Quadriplegia, etc.

Automatic Increase Option
This rider is available with most carriers at no additional cost. The AIB rider will increase your monthly benefit amount by 5% of the original benefit at each policy anniversary, for the first 5 anniversaries. Your premium will be increased based on attained age at each anniversary. If you have this rider and chose not to accept the annual increase, you can do so by submitting a written request to the insurer.

“Own–Occupation” Total Disability
This rider allows certain occupation classes to upgrade the definition of disability to a “true own-occupation” definition. If this rider is added to your contract it will replace the standard definition of disability offered, to one that states “You will be considered totally disabled if due to injury or sickness you are unable to perform the material and substantial duties of your regular occupation”.

Refund of Premium / Good Health Benefit
By having this rider on your policy, the insurance company will refund a percentage of the premium paid over a defined period of time that you remain healthy and not on disability claim, until age 65. (Usually 50% of premiums paid for each 5-year period you remain healthy, or 100% of premiums at age 65) This is a way of reducing the overall cost of having disability insurance, if you do not go on claim.

Spousal Catastrophic Disability
Adding this rider to your contract will place coverage on your spouse that pays a benefit for a catastrophic disability. For purposes of this rider, catastrophically disabled means that due to injury or sickness, your spouse has a complete and irrecoverable loss of sight in both eyes, hearing in both ears, speech; use of both feet, or both hands, or one foot and one hand; or has Alzheimer's Disease or other irreversible forms of dementia or senility, Aphasia, Hemiparesis, Paraplegia, or Quadriplegia and is unable to perform at least two of the Activities of Daily Living without the assistance of another person. Activities of Daily Living are: Bathing, Continence, Dressing, Eating, Toileting, and Transferring.

* Additional policy riders incur additional cost.

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