What is a Disability Rider?
A disability rider is an add-on to a life insurance policy that adjusts your life insurance coverage in the event of a disability. Generally, disability riders either provide you with supplemental income or pause your premium payments while you are what insurers call “totally disabled.”
A quick word on riders
Riders are components you can add to your life insurance policy to expand its protections. You might add a child rider to get life insurance coverage for your son or daughter, for example.
Different life insurance providers offer different riders. Some riders come automatically included in your policy, while others need to be selected and added by you.
Many riders come with a cost. The added cost associated with the added protection gets wrapped into your premium for your life insurance policy.
Generally speaking, riders give you a lower-cost way to get coverage. A long-term care rider may cost less than a standalone long-term care insurance policy, for example.
Types of disability riders
There are two main types of life insurance riders:
Disability income rider. This rider steps in if you become totally disabled and unable to work. It provides supplemental income paid on a prescribed schedule. In many cases, the rider will pay out a certain percentage of your death benefit on a monthly basis for as long as you’re unable to work.
Waiver of premium rider. In the event of a total disability, this rider allows you to maintain your life insurance coverage without continuing to pay your premiums. If you recover from your disability, you’ll need to start paying your premiums again.
When you use a disability rider, the money that you receive gets subtracted from your death benefit, which means your beneficiaries will receive a lessened amount when you pass away. Some insurance companies cap the amount you can pull from your death benefit in this way. They may also specify that your disability rider is only in effect until a certain age (e.g., 65).
Activating a disability rider
In order to activate a disability rider, you need to fit your life insurance company’s definition of “totally disabled.” Generally, if you’re unable to work, you’ll qualify. Certain medical conditions will also qualify you.
Your life insurance provider will generally need proof of your total disability before they allow a rider to take effect. You may need paperwork from your doctor and/or the Social Security Administration to show that you have a significant disability.
Many disability riders also come with a waiting period. You may need to wait six months before the life insurance company will begin issuing you supplemental income or pausing your premium payments, for example.
Moving forward, you may need to submit new proof of your disability to your life insurance provider on a periodic basis in order to keep your rider active.