Beyond the basics: Disability income insurance riders you must get
Photo by Kindel Media
There are many types of insurance, some are for your car while other types may cover your medical needs. You insure your home and many people also go so far as to insure their valuable assets. One type of insurance that many people fail to consider is disability insurance. If you are working as a physician or in any other field, securing disability insurance is the best way to ensure your financial future is secure.
The Ameritas review details the benefits of maintaining disability insurance, but did you know that riders can help you protect yourself even further? Today we will go beyond the basics of disability insurance to cover which riders you should get to further customize your disability policy.
What is a disability policy?
A disability insurance policy is a way to ensure that you have a backup form of income in the event that you are unfit to work. Riders are extra coverage options that can offer a variety of further provisions and protections on top of your basic Insurance riders. We will help you learn why these riders are important, what types are available, and how to select which will best fit your needs.
Disability rider options
Not all insurance riders are beneficial, in fact, some offer the same type of coverage offered in certain base disability insurance policies. In most cases, however, riders will give you supplemental coverage on top of your basic policy features. There is an extra cost for each rider, and depending on the type, the cost may be more than the basic coverage itself. In most cases, riders must be selected and purchased at the time the original disability income insurance policy is issued.
- Cost-of-living rider – this type of rider ensures that you are protected against inflation. Specifically, the number of your benefits will be adjusted to match the current cost of living each year. This is incredibly beneficial during times of high inflation, or during a recession. There may be a cap on the amount of increase a rider will provide, but it is well worth the ancillary cost.
- Hospital income rider – this form of a rider is not as common as others, but for those who have underlying health concerns, it is a smart option. This type of rider allows for a specific set amount to be paid out each day that you are hospitalized due to a disability. This rider offers 12 months’ worth of payments and is best for people who have a long elimination period.
- Partial disability benefits rider – this type of rider will provide benefits if you are partially or fully disabled. Instead of paying a percentage of lost earnings, you will get a percentage of your monthly benefits for a maximum of three months.
- Future increase option rider – if you are under 40, this is one of the best riders you can add to your policy. This form of rider grants you the right to add-on extra disability insurance amounts to your current policy. These rights are usually given at specific set times in the future and typically are only available until age 50.
- Social Security rider – unfortunately, more than 60% of people who apply for SSI total disability are denied. You can purchase this rider to offset missing out on benefits during the SSI application period. The rider covers you for a year and can be structured as an offset rider or an all-or-nothing rider.
- Waiver-of-premium rider – this is one of the best riders you can add to your disability coverage. This rider offers you the option to still maintain your coverage following a disability, but you won’t have to pay further premiums. This will kick in only after you have been disabled for a specific time period and once you go back to work, you will need to resume payments.
- Lifetime extension rider – people are working longer than ever, so it makes sense that your disability insurance should also offer longer coverage. This type of rider ensures that you will get benefits from your coverage past the age of retirement. The caveat is that you will need to have been injured before a certain age, typically 50 years old. The coverage will last the rest of your life so long as you are still disabled.
Getting the right disability coverage to last a lifetime
There are many more disability insurance riders available than what is listed here. It can be tempting to add multiple riders to your policy, but keep in mind each addition will raise the cost of your premiums. Also, many riders offer overlapping coverage with a basic policy, or even with other riders. With disability insurance costing on average 5% of a person’s annual income, it is important to decide on a policy and riders that fit both your coverage needs and your budget.
Author Bio:
Heather Blacksmith has a Bachelor’s Degree in Finance and works at a finance firm based in Seattle, Washington. She specializes in small business finance, credit, law, and insurance. When she is not working, she spends her time in her favorite coffee shop writing on various finance-related topics. Other than that, she enjoys adult coloring books, recycling, and running.