What is the Automatic Increase Rider? Disability Insurance
When you purchase an individual disability policy, oftentimes the automatic increase rider is added to the policy at no charge. There are multiple terms for this same rider such as future benefit increase rider.
The automatic increase rider automatically increases the monthly benefit by 4% each of the first 6 years of the policy automatically. The premium increases slightly as well. Most policies allow you to opt out 2 of those years without the rider dropping off of the policy. If you opt out more than twice, the rider drops off of the policy.
This is a minor rider and not to be confused with the benefit purchase rider or the benefit update rider. The benefit purchase rider (no cost) allows for more significant increases. This option comes out every 3 years. The company requests that you complete a simple form and submit financial information. The company will review the criteria and let you know if you are eligible for additional benefits and if so, they will make an offer. They will let you know how much benefit they can offer and what it will cost. You must accept at least 50% of the offer to retain the rider. If this rider falls off of the policy, you may still increase in the future subject to medical questions.
If you wish to increase your policy substantially and are not in the 3 year policy anniversary period, you may advance this option if you have a 50% or more increase in income.
For more information about the automatic increase rider or the benefit purchase rider or just wish to increase your current disability policy, contact Set for Life Insurance today!
