The Insurance Buying Guide: Optional Policy Benefits
When you're considering an income insurance package, the final ingredient is the inclusion of any optional policy benefits. And disability income policies provide a smorgasbord of options.
The ones that appeal to most people include:
- Future Increase Option. This is important if you're under 40 years of age. It protects future insurability by providing the guaranteed right to purchase additional amounts of disability income insurance in future years. (The assumption is that you will get raises over time.) Normally, the rider is not available past age 40, although some insurers may offer it up to age 50.
- Cost of Living Rider. To protect the purchasing power of disability income benefits, many applicants add the Cost of Living Rider to their base policy. This simply states that, as a predetermined cost of living standard increases, the benefits provided by the policy will increase by a corresponding amount.
- Lifetime Benefits Option. Although it is a relatively expensive option, Lifetime Accident and Sickness has particular appeal to a person who is likely to experience dramatic increases in earnings over the years.
Example: A young physician in the first year or two of practice may not be earning a substantial amount of income, but most certainly will over his or her professional career. A career ending in disability would have a drastic effect on such a person by substantially reducing potential lifetime earnings. Extending the benefit period for life will help reduce the effect of such a loss.
These and other optional benefits are described in more detail below.
The additional premium charged for most of the optional benefits described here is relatively low. Depending on the option, the additional cost would range from $30 to $100 annually.
