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.
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. Some riders offer you the chance to purchase more coverage in the future.
The types of riders in insurance policies depend on the kind of 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, an insurance 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.
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 insurance policy 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 make your student loan payments while you are receiving your insurance benefits, which means that you won’t need to use your benefit payments for those bills.
Catastrophic Illness Protection: Even if you are not working due to a disability, it 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 additional bills incurred as a result of this new illness or injury.
A rider can help you customize and enhance the coverage you need from of your different policies. Contact us if you’d like to discuss your insurance rider needs with one of our specialists today.
Treloar & Heisel, an EPIC Company, is a premier financial services provider to dental and medical professionals across the country. We assist thousands of clients from residency to practice and through retirement with a comprehensive suite of financial services, custom-tailored advice, and a strong national network focused on delivering the highest level of service.