Studies Highlight Gaps in Disability Insurance

Home/LEARN/Insurance/Studies Highlight Gaps in Disability Insurance

By David White | May 17, 2011 | Updated: Sep 15, 2019

Table of Contents

Setting up some sort of disability insurance is the first step in ensuring you are covered in case of an unexpected accident, but recent studies suggest it might not be enough.

Some standard disability insurance policies can leave large gaps in coverage which could end up costing you thousands of dollars depending on your income and how the policy is written.

The majority of disability insurance policies will replace around 60% of your income in the event of you becoming unable to work, but policies vary greatly in how they define disability, whether or not benefit increases over time and how long the policy will last. However, the studies show that there are a number of disability insurance riders which can help secure your future finances.

A cost of living adjustment rider (COLA) will make sure that your disability benefit will rise in line with inflation. Financial adviser James Holtzman explains that,

It adds about 15% to the cost of the policy, but it protects your benefit from decreasing in the future.

There are two main types of cost of living adjustment riders available.

There is a flat rate increase of a few percent every year or a rider linked to the consumer price index. The value of a cost of living adjustment rider increase the longer a policyholder draws disability, so it is more important for a young worker with many years of work ahead of them than it is for someone close to retirement age.

Another useful rider is the own occupation rider. Most policies will only provide cover if you are unable to return to any type of job. So for example, a surgeon who becomes physically unable to perform surgery, but can still work in a coffee shop would not be eligible for benefits regardless of the huge salary reduction he might be forced to take.

An own occupation rider will provide coverage if you cannot return to your specific job. This type of rider is the most beneficial for individuals with very specialized occupations. It is specifically designed for high income occupations requiring years of training. Own occupation riders can cost up to 20% of your standard premium and provide coverage for your specific occupation.

There are many other riders available including lifetime extensions, future increases and return of premium. Each is suited to a different situation or concern. It is important to research where the gaps are in your disability insurance policy and look at the available riders to find the best way to bridge such gaps.

0 Reviews

Write a Review

2019-09-15T09:16:33+00:00

Card of the Year

The Card of the Year 2019

ABOC Platinum Rewards Credit Card

News Cardholder Offer:

$150 Statement Credit

Card Most Attractive Features:

Bonus points , Intro rates , Late Payment Will Not Raise Your APR , No annual fee

at Other Issuers secure site

ABOC Platinum Rewards Credit Card

Things to Know About this Credit Card

  • 0% Intro APR on Purchases and Balance Transfers for 12 months; after that, the variable APR will be 14.40% to 24.40%, based on your creditworthiness
  • Earn $150 Statement Credit after you spend $1,200 on purchases within the first 90 days from account opening
  • Earn 5x rewards on up to $1,500 in combined purchases each quarter in popular categories such as dining, groceries, travel, and automotive
  • No upper limit on the points you can accumulate, and since points never expire, you can save up for a big award!
  • Earn Points on Every Purchase! It's simple: $1 = 1 Point
  • No Annual Fee or Foreign Transaction Fee
  • Select Your Rewards Your Way
  • No Foreign Transaction Fee

Intro APR

0%*

Intro APR Period

12 months*

Regular APR

14.40% -24.40% (Variable)*

Grace Period

25 days*

Annual Fee

$0*

Credit Needed

Good*

at Other Issuers secure site



Card Offers to Consider

2019-09-15T09:16:33+00:00
Newsletter

Stay up to date with our latest news and products.

Advertiser Disclosure

Market Pro Secure® is an independent payment card comparison service supported by advertisers, a complete list of which can be seen in our Editorial Guidelines. Even though some of these advertisers are financial product providers and credit card issuers, our paid partnerships don't affect card ratings or the Best Card Picks on our website. We don't post any content that is provided or commissioned by any of our partners. However, our paid partnerships may affect how and where products appear on our site, including the order in which they are presented within listing categories. This order may also be affected by our website rules, as well as the likelihood of the applicant’s credit approval. We can't offer any warranty for the accuracy of the credit card information we share on our website, even though we do our best to keep the Terms and Conditions, rates, and other credit card details up-to-date. For more accurate information, click "APPLY NOW" to get transferred to the credit card issuer's official website. Market Pro Secure® doesn't include all available payment cards in the marketplace.

ADVERTISER DISCLOSURE. Market Pro Secure® is an independent payment card comparison service supported by advertisers, a complete list of which can be seen in our Editorial Guidelines. Even though some of these advertisers are financial product providers and credit card issuers, our paid partnerships don’t affect card ratings or the Best Card Picks on our website. We don't post any content that is provided or commissioned by any of our partners. However, our paid partnerships may affect how and where products appear on our site, including the order in which they are presented within listing categories. This order may also be affected by our website rules, as well as the likelihood of the applicant’s credit approval. We can't offer any warranty for the accuracy of the credit card information we share on our website, even though we do our best to keep the Terms and Conditions, rates, and other credit card details up-to-date. For more accurate information, click "APPLY NOW" to get transferred to the credit card issuer's official website. Market Pro Secure® doesn't include all available payment cards in the marketplace.

EDITORIAL DISCLOSURE. Market Pro Secure® doesn't post any content that is provided or commissioned by our advertisers, the majority of which are financial product providers and credit card issuers whose offers we feature on our website. The entirety of our editorial content – including any opinions, analyses, reviews, and evaluations – belongs to the author alone, and has not been reviewed, approved, or otherwise endorsed by our advertisers.