Augment Your Disability Insurance Policy
Disability Insurance Riders
Riders are optimizations that you can add to a policy to make it more beneficial. They generally add an additional cost to your coverage, but will give you additional benefits when your policy becomes active.
Future Purchase Option
Also called Guaranteed Insurability, this ensures that your coverage will not be restricted by your lower income when you purchased your policy. In essence, if your income has increased and you wish to add more coverage, you can do so without having to purchase additional policies. It also means that you will not be subject to tests or other proofs of medical insurability. It also will allow you to be covered further if you develop conditions that normally would bar you from coverage.
Cost of Living Adjustment (COLA)
While your policy might be such that at the time of purchase you have enough money until age 65, you might find that a number of factors have conspired to devalue your coverage.
Foremost among them can be inflation. However, the Cost of Living Adjustment, when added to a disability insurance policy guarantees that your benefits will adjusted to match the current rate of inflation. Either a pre-determined percentage will be used to calculate the level of inflation, or a government standard such as the Consumer Price Index of Urban Wage Earners (CPI-U).
Disability insurance gives you benefits if you are no longer able to work at all. However, if you are partially disabled and simply cannot work at the same level and bring in the same wages you once could, you are generally out of luck. However, Residual benefits will augment your income so that up to a certain percentage of your lost income will be supplemented.
Social Security Rider
Social Security provides benefits for disabled workers, but the definition of “disabled” that is used by the federal government is usually very stringent, hence the need for disability insurance. If you hoped to use Social Security to augment your income when disabled or needed income from the program in the period before your disability insurance kicks in, you will be at a disadvantage if the Social Security Administration does not feel you are truly disabled. Social Security Riders will compensate you for your lost Social Security benefits.