Why are Disability Insurance Riders so Important for Your Policy?
As an advocate for disability insurance, I am focused on making sure that all physicians are educated and empowered to make the best choice for their insurance plans. By taking the time to secure proper coverage, you can ensure you and your family are protected in the future.
Injured in the prime of my career, I have taken an unexpected journey to become an advocate and advisor for physician insurance. My personal experience navigating my own disability claim experience, and not knowing what type of policy I ever had, has been the inspiration for my new career and mission.
Below I have shared in-depth one of the critical components of your disability insurance policy, insurance riders, and why they are so important.
Research shows that three in ten families have experienced a disability at least once in the past ten years. Fifty-five percent of those people also admitted to the experience of having a negative financial impact on their household.
The numbers are clear: Millions of people suffer from the effects of a disability in their household, most of whom are unprepared for the cost of it all.
While everyone should have disability insurance, it is vital that these policies are not generalized. People have different needs, and each individual should seek tailored coverage to their specific circumstances.
Riders are what allow a disability policy to be personalized to the policyholder. They are the building blocks for a policy. While riders aid in establishing a policy, one should keep in mind that some options can actually restrict or limit coverage. To understand the intricacies of each rider available, it is essential to speak with a broker that can adequately explain all options.
The most important factor in a physician's disability insurance policy is the specialty-specific language for their occupation and what constitutes a total disability. Some companies add this language as a rider, while others have it built into the basic policy. There is no language standardization in insurance, and what is commonly known as “own occupation” goes by several different terms depending on the carrier.
Those applying for disability insurance want their policy’s definition of total disability to cover them regardless if they are employed in another occupation following a disability. The goal is to be substituted for the duties one was trained for and perform regularly.!
The second most important rider is one that grants the ability to increase coverage without undergoing further medical underwriting. Almost every insurance application includes medical underwriting - a process often involving a physical examination, drawing and testing of bodily fluids, and a comprehensive review of your medical, pharmaceutical, and motor vehicle records. This in-depth process is one best experienced only once. It’s helpful to think of increasing riders as a pool of money accessible as the policy holder’s need for coverage increases. This rider also goes by many names depending on the carrier.
In addition to the riders outlined above, several additional riders could make a critical situation more manageable with their coverage.
The partial or residual benefit rider will pay a portion of losses if the policyholder has to move to part-time work due to an illness or injury. Multiple sclerosis, other autoimmune diseases, and early degenerative diseases are some examples that could cause someone to cut back on work instead of stopping altogether. A treating physician may say that an individual suffering from an ailment of this nature can perform their job duties with decreased hours, caseload, or patient panel. This rider will help bridge the gap of lost income between part-time and full-time employment. Each carrier has a slightly different definition of its trigger event and payment amounts.
The catastrophic benefit is exactly what it sounds like. A policyholder would get an additional benefit if a catastrophic disability left them unable to perform two or more activities of daily living or rendered them severely cognitively disabled. This rider is not available in all fifty states.
The cost of living adjustment rider, also known as COLA, is meant to be inflationary protection. The idea behind this rider is for benefit payments to increase along with the cost of living. Again, different carriers have different definitions. Some have a straight percentage, while others have a range. Some utilize simple interest, while others use compounded interest.
Most private carriers have included in their base language that their policies are automatically renewable and noncancellable. However, one carrier adds the noncancellable piece as a rider. A policyholder does not want a carrier to be able to change the terms of the policy or cancel the policy that they have gone through underwriting to secure.
The most significant difference among the carriers is how they treat mental health and substance abuse coverage. Some carriers will give options, and some are set depending on where you live and what you do. A carrier may offer discounts for limited coverage.
While there are a variety of riders, none are one-size-fits-all. Simply put, what will work best for you depends on your specific circumstances and needs.
At PearsonRavitz, we are on a mission to protect physicians by offering them customized
private disability policies that will support them and their families.
