Disability Insurance Riders: 4 Riders You Need (and 3 You Might Not)

If you’re a high-income healthcare professional, then long-term disability insurance should be a financial planning priority. Getting the right disability policy today, based on your medical or dental specialty, can protect your income if you can’t physically work. Policy add-ons called “disability insurance riders” expand your coverage and further personalize your policy to meet your individual needs and budget.

But in most cases, you can’t add these riders once a policy is issued. It’s important to understand which riders you need versus which ones could be an unnecessary cost for your situation.

What’s a disability insurance rider?

A disability insurance rider is an optional policy provision that provides additional benefits and custom coverage. Some of these add-on features might already be built into the policy or can be added at no extra cost. But others quickly raise your policy premium payments.

The name and scope of each available disability insurance rider varies by insurance company. Ultimately, what makes sense for one person might be completely unnecessary for the next due to their financial situation or overall risk tolerance.

Related: International Disability Insurance: What to Expect From Your Coverage While Abroad

Disability insurance riders you must have

Whether you’re buying disability insurance for the first time or looking for supplemental coverage to boost your existing group policy, here are some disability insurance riders to consider.

True own-occupation coverage: A must-have rider for high-income healthcare professionals

An own-occupation policy provides specialty-specific coverage. This means you can collect disability insurance benefits if you can’t perform the “substantial duties” of your specific occupation.

For example, let’s say you’re a thoracic surgeon who can’t operate on patients due to a car accident that crushed one of your hands. With true own-occupation coverage, you’d be able to collect your full benefits. But you’d also be able to continue working in another medical field or earning income in a totally different profession without the risk of losing your disability benefits.

Without an own-occupation rider, you’d need to prove that you weren’t able to work in any occupation. This makes it more challenging to file a disability claim, and therefore, puts your high income at risk.

Although true own-occupation coverage costs more than an any-occupation policy, it’s worth it for anyone who’s spent years and hundreds of thousands of dollars to gain specialized knowledge and training.

Future purchase option: A great opportunity for residents and fellows

Depending on the insurance carrier, this rider might be referred to as a “future purchase rider”, “future increase option”, “future benefits” or another variation. The gist of this add-on is that you can increase your disability benefits in the future without additional medical underwriting.

The future option rider is ideal for residents, fellows and young attendings who haven’t reached their full earning potential considering your salary will rapidly increase. It can also make getting an adequate policy more affordable now when funds are more limited, while allowing you to purchase additional coverage later.

Note that you aren’t required to increase your benefit. But if you decide to, you won’t have to undergo a medical exam or answer questions, even if your health worsens.

Non-cancelable and guaranteed renewable riders

Non-cancelable and guaranteed renewable provisions are sometimes built-in to the policy. If they aren’t, you’ll want to add these disability insurance riders.

• Non-cancelable. This rider ensures your costs and coverage specifics stays the same throughout the duration of your policy. It applies to your premiums, payout amount, benefit period, etc. It even stands if you switch to a profession with higher risk or a lower income.
• Guaranteed renewable. This guarantees the insurance company won't cancel your policy as long as you continue scheduled payments.

These features might result in additional premium costs, but you can think of these provisions as insurance on your insurance.

Partial and residual disability benefit rider

If you don’t qualify for a total disability, a partial or residual disability rider pays benefits if you can work in your current role, but not to the full extent as before. Depending on the policy, you’ll need to lose at least 15% to 20% of your income, time or duties to qualify for a partial disability.

Note that some disability insurance policies distinguish between partial benefits and residual disability benefits, depending on loss of duties or time, versus loss of income. But other policies include all of it under one provision.

Everyone should have at least some level of residual disability coverage. The goal is to cover the difference between what you earned pre-disability and what you can still earn with your partial disability.

Recovery benefits

Recovery benefits are typically included with most residual benefit provisions. It provides protection for when you’re able to return to work at full capacity, but haven’t quite returned to your pre-disability income. 

Cost-of-living adjustment (COLA)

A cost-of-living adjustment (COLA) rider automatically adjusts your benefit amount annually to keep pace with inflation. Increases are usually based on the Consumer Price Index (CPI) or a set percentage. But it doesn’t kick in until you’ve started collecting disability benefits, usually after a year. 

This rider might make sense if you’re in the early stages of your career or have maxed out your coverage amount. But the COLA rider can be expensive. It might be worth it if you can instead increase your base policy benefit, or take advantage of a future purchase option that keeps your benefits in line with inflation until you file a claim.

Catastrophic benefits for a severe disability

A catastrophic disability rider can provide additional benefits for a severely disabling injury or medical condition. This is usually defined as being unable to perform two or more activities of daily living, which include:

• Bathing,
• Dressing,
• Eating,
• Using the restroom,
• Continence, and
• Transferring. 

However, depending on the policy, it might also cover the complete loss of your speech, hearing or sight. Additionally, it might cover the loss of the use of both hands, both feet or one hand and one foot.

Although the risk of experiencing a catastrophic disability is relatively low, this rider is intended to cover the costs of in-home care to assist with your daily life. Therefore, this monthly benefit is paid in addition to your base insurance coverage.

A catastrophic disability rider can be inexpensive to add, but might result in an extra $5,000 per month in disability benefits. It might make sense if you’re already purchasing the maximum coverage for your income and would like the added security this rider provides. But if you have wiggle room with your base policy coverage, it might make more sense to up your benefit amount instead of adding the costs of a rider that comes with limitations.

Disability insurance riders: Know before you buy

Disability insurance riders can be highly beneficial, but don’t automatically say yes to everything that’s offered. After all, the only person benefiting from that scenario is the insurance agent earning a larger commission.

Instead, consider your ideal budget and own personal circumstances before moving forward with a disability policy. This includes important variables that can influence which riders you buy (and the ones you don’t), such as your occupation, lifestyle choices and overall risk tolerance.

Need help finding an individual disability insurance policy that matches your needs? SLP Insurance works with you to determine which disability insurance riders make sense for your situation. Plus, we’ll hunt down the top discounts available to make coverage more affordable.

Fill out the quote form below, and our team will reach out with next steps.