A COLA rider is designed to counteract the loss of purchasing power that may happen to a physician’s insurance benefit due to inflation.
One important caveat: With a COLA rider, your benefit only adjusts with the rate of inflation when you are on a claim. If a doctor purchases a policy with a $5,000 benefit in 2018, and then goes on claim in 2035, they will still start with a benefit amount of $5,000 regardless of inflation. However, if the doctor remains on claim for another five years, the COLA rider will increase with the cost-of-living.
Most COLA riders do not even go into effect until the policyholder has been on claim for at least 12 months, and these provisions are most beneficial in the event of a long-term disability. If you are on claim for several decades, a $5,000 benefit will have significantly less purchasing power after 20 or 30 years, and a COLA rider could provide tens of thousands of additional dollars in benefits.
Thus, a COLA rider can be a tremendous help in the event of a serious disability, however it will not impact the majority of policyholders who go on disability claims for a few years or less.
A COLA rider is not considered a necessity for all physicians. However if you can afford to add it and you are going to practice medicine for at least 10 more years, a COLA rider can guarantee the continued value of your disability benefit regardless of inflation in the event of a long-term claim.
The Cost of Living Adjustment feature ensures your benefits keep pace with inflation if you are receiving compensation from a disability claim.
Available Options
- 4-year Delayed 3% Simple Interest
- 3% Simple Interest
- 0-6% Compound Interest
- 3% Compound Interest
- 2-6% Compound Interest
- 3-6% Compound Interest
- 6% Compound Interest
