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Products  Disability Insurance (DI) Common DI Riders
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Common Disability Income Riders
Automatic Increase Rider (AIR):
This rider increases the monthly benefit for the first five years to keep pace with inflation. The AIR will only increase the benefit while not on claim where the COLA rider requires the client to be on claim in order for the benefits to increase. This is not available on Standard’s DI policies.
Catastrophic Benefit:
This rider pays an additional benefit if the insured is receiving total disability benefits and is unable to perform at least two activities of daily living (ADLs); has a severe cognitive impairments; or is presumptively totally disabled. Similar to the trigger on an Long Term Care policy.
Cost of Living Adjustment (COLA):
This option applies to those who are disabled for more than one year. It automatically increases the amount of coverage each year to keep up with inflation. Some policies increase by a fixed amount each year while others are indexed to inflation. COLA is of particular importance to young clients with longer life expectancies. For example, a COLA is much more important to Ryan Stevens who was permanently disabled at age 26 than it is to Mel Walker who was disabled at age 56.
Future Increase/Purchase Option:
Allows policy holders to purchase additional coverage through age 51, without having to prove insurability. Policyholder must simply document an increase in income.
Residual Benefits:
This rider is essential because in many cases, insureds can work part time, but not full time. The Residual Benefits rider pays a percentage of monthly earnings if the insured suffers a loss of income of 20 percent or more. This eliminates the "all or nothing" benefit structure and can help facilitate a friendlier, more gradual return-to-work experience.
Residual Example:
If Charles Green was making $100,000 annually, had a heart attack and then returned to work but the doctor told him that he could only work part-time. Working part time he earned $60,000. Thus, he would have a 40 percent loss of earnings and would continue to receive a 60 percent disability benefit.
Return of Premium:
In some states, carriers offer a Return of Premium option, with which an insured with favorable claims experience becomes eligible for a refund of part of the premium paid. Some companies refund money periodically throughout the policy period, while others refund at age 65.
Supplemental Social Insurance (SSI):
If an insured does not qualify for Social Security benefits, this rider increases the monthly disability benefit by up to $2,000. Basically, if the Social Security Administration does not pay a benefit, the insurance company will.
Non-disabling Injuries:
If the client suffers injuries requiring medical treatment prescribed by a physician or dentist, the carrier will pay the expense of such treatment up to one half of the monthly benefit amount (or stated benefit amount). No EP is required. This is not available on Standard’s DI policies.
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