The following are a few of the more commonly purchased policy riders.
Own Occupation Rider
The Own Occupation rider amends the total disability definition by removing the restriction against working in any gainful occupation. If you cannot perform the duties of your own occupation, you can take a job in a different field and remain eligible for benefits.
Cost of Living Adjustment (COLA) Rider
As time passes, inflation gradually erodes the value of your Disability benefit. Most contracts allow you to compensate for this with the COLA rider. While on claim, this rider would ensure your benefit is increased by an amount equal to the Consumer Price Index or a flat percentage.
First Day Hospitalization Rider
With this rider, benefits will begin from the first day you are hospitalized due to your disabling condition regardless of how long your Waiting Period may be.
Return of Premium (ROP) Rider
For a substantial extra premium, the ROP rider will guarantee a refund of a percentage of your premiums after a pre-determined number of claim free years. A typical example would be for an additional 40% of the premium, the insurer will refund 50% of the premium (including the ROP amount) after being claim free for 8 continuous years. Some contracts will also allow you to receive a refund if you make a claim, but the total benefit paid out was 20% or less of premiums.
Residual Disability Rider
What if your disability doesn’t keep you from working, but does prevent you from putting in as many hours? Many people find that after a disability, it takes time to ease back into work. They can only work part-time at first. During this time, they experience a loss of income.
Residual benefits are designed to make up for a shortfall in income in such instances.
Many insurers now include a “loss of earnings” definition of disability in their basic policies that promises to make up the shortfall between what you earned before you were disabled and after, so as not to penalize policyholders for continuing to work. If your policy doesn’t have residual disability built in, or include a “loss of earnings” definition of disability, you may want to pay the extra premium to have residual disability added as a rider.
Guaranteed-Increase or Future Increase Option Rider
All first-time disability buyers have to pass medical muster. Though increases in your income may make you want additional coverage in the future, you probably won’t want to undergo a second physical — especially if you’ve acquired an ulcer or a bad back since you bought your policy. A guaranteed-increase option, sometimes called a “guarantee of insurability rider” or “future-increase option,” will help you avoid this hassle.
This rider allows you to purchase additional insurance without providing evidence of good health. You need only provide proof of your income, to ensure that your total insurance amount does not exceed the maximum benefit amount available for that income.