As with life insurance policies, disability income policies may offer additional and optional benefits that owner-insureds can add to their base policies by purchasing riders.
Waiver of premium – The waiver of premium provision or rider allows policyholders to stop paying premiums once they begin to receive disability income benefits. Thus, the policy will continue in force during a period of disability.
Automatic benefit increases – This provision is similar to the inflation protection provision in a long-term care insurance policy. Basically, this provision automatically increases the benefit payable under the policy by a certain percentage each year. The percentage is usually based on the Consumer Price Index (CPI).
Partial Disabilities and Residual Riders – Designed to address the fact that recovering from a disability is a gradual process, these riders pay partial disability benefits during the time that an individual returns to work on a part-time basis.
Pension Contributions and Retirement Protection Riders – These recently-developed types of riders insure that an individual’s retirement plans continue to receive contributions during a period of disability.
Reproduced with permission. Copyright The National Underwriter Co. Division of ALM