Common Disability Insurance Riders

Posted on: October 20, 2016 by Chuck Krugh, CFP

A rider is a special feature or additional guarantee on top of a basic insurance policy. Some riders are available for free – you just have to check the appropriate box on the application. For other riders you may have to pay some additional monthly premium. But depending on your individual situation, the extra guarantees and services offered under the rider are often well worth the relatively small extra cost.

Insurance companies offer riders to appeal to niche markets or make their insurance policy more comprehensive and complete. Many times, insurance carriers develop and implement innovative insurance riders to differentiate themselves from competing insurance companies.

Here are some of the most common insurance riders and how they work.

Cost of Living Adjustment

Inflation eats away at the purchasing power of a dollar over time. Suppose you were considering a disability insurance policy that provided up to $7,000 per month in lost wages in the event you become sick or hurt or otherwise unable to work. And, boom! Something happens, and you are permanently and totally disabled tomorrow.

While most disability cases resolve themselves within a few years, if your disability is permanent, you could be on claim for ten years, twenty years or more – especially if disability struck while you are young. It happens.

Do you think that $7,000 per month is going to purchase the same amount of goods and services 25 years in the future that it does today? Will food, fuel and other basic expenditures go up or down over the next quarter of a century?

When you elect the Cost of Living Adjustment rider, you are protecting your income benefit from being eroded by inflation over the years, usually by adjusting your income benefit by the amount of inflation each year. This protection comes with the cost of additional premium. But it is a critical part of protecting your future income and financial security in the event you have a severe and chronic disability that persists for many years.

‘Own Occupation’

If you have an ‘own occupation’ policy or rider, the insurance company must pay benefits if your disability prevents you from gainful employment in your own occupation. For our customers, that means your carrier will pay benefits if you can no longer earn a living as a doctor. This is a much better policy than those with ‘any occupation’ definitions of disability, which will only pay benefits if you cannot earn a living in any occupation – much narrower definition of a qualifying disability.

‘Own occupation’ policies and those with ‘own occupation’ riders are much more likely to pay a claim than policies using an ‘any occupation’ definition of disability.

This is an especially important consideration for physicians and medical school students, who would be hard pressed to find a career with better pay than practicing as a doctor without extensive retraining. We recommend seeking out carriers that offer ‘own occupation’ disability insurance policies.

Future Increase Option

insurance riderThis rider guarantees you the right to purchase more disability insurance protection at specific times in the future, regardless of your medical condition at the time. If you don’t have this rider, and you want more disability coverage – for example, because your income went up when you completed your residency, or because you started a family – you would have to medically requalify. If you have had a change in your medical condition since you bought the original policy, you may not be able to purchase the needed additional protection at any price.

Automatic Benefit Enhancement

Most of the time, disability insurance policies will replace a fraction of existing income. But if you are disabled for a long time, simply replacing 50 percent of your income at that moment does not fully protect you in the event disability costs you your medical career. An automatic benefit enhancement rider ensures that your benefit will keep pace with planned or standard income increases over the years. Carriers vary, but one carrier we commonly place clients with offers an automatic 4 percent per year increase in protection for the first six years – with no proof of income necessary. is one of the nation’s leading agencies specializing specifically in protecting doctors, dentists and allied professionals against the devastating effects of losing their livelihood because of disability. We can also provide other critical personal lines of protection, including life insurance and long term care insurance.

Our offices are in California, but we routinely work with clients all over the United States. For more information, or to get an initial quote and start the path to protection, call us today at 866-899-7318. Or visit us on the Web at and fill out our short questionnaire.

We look forward to working with you.

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