Do I Really Need Additional Riders on My Disability Insurance Policy?

Posted 7/25/2011

Let’s face it, none of us like to pay more for a disability insurance policy than we absolutely have to.  We typically see insurance as just another cost.  It is true that disability insurance is a cost if never used, and of coarse we hope to never have to use it.  However, the cost of a lost income is astronomically greater, so catastrophic that nearly 50% of home foreclosures are due to disability (while only 3% are due to death).  A disability resulting in a full loss of income is catastrophic in severity AND frequency.  Nearly 1 in 3 people will experience a long term disability in their working years.

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So, I understand that I need a disability insurance policy to protect my income.  But, why does it have to cost so much?  It generally costs you more if it has the potential to cost the insurance company more.  Insurance products generally get priced cheaper when they have a lower chance of ever being used for a claim.  Companies offer wide varieties of choices on how to structure your own disability insurance policy, starting with the bare-bones basic contract.  Usually, for some of the additional features that increase the policy’s chances of paying out a claim benefit, the insurance company will charge extra for add-on features called Riders.  The absence or presence of certain riders can make a significant difference in whether or not a policy will pay you a claim.  What is the point in buying a policy at all if it is not going to pay you when you need it most?  For this reason, it is vitally important include certain riders.

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For detailed information on features and riders, click on the Contract—Key Terms Tab.