When shopping for a disability policy, make sure to include a Cost of Living Benefit (COLA) in your shopping list. Without such a benefit you will probably require another source of income in the event your claim becomes long term.
This benefit was designed to counteract the negative effects that inflation plays upon your disability benefit. With the addition of the COLA rider your benefit will be adjusted annually after 365 days of disability and every 365 days thereafter. It is normally calculated by the consumer price index. The CPI measures the increase in the cost of goods most commonly purchased by consumers from year to year. In other words it calculates the inflation faced by consumers in their typical purchases.
Each company will have their own version of the rider. Some may provide an annual adjustment of the fixed percentage on a per year basis determined from expected inflation. Others will use a benefit package that is compounded on an annual basis. Whatever the case it is important to be aware that this vital option is available to you as a physician searching for the most appropriate protection.
written by: Stacia Musleh, Vice President
