Chartered Retirement Planning Counselor (CRPC) Practice Exam

The term that describes a policy rider designed to increase benefits periodically once a disability begins is a cost-of-living adjustment rider. This rider is particularly important in the context of disability insurance because it helps ensure that the benefits received maintain their purchasing power over time, especially considering inflation. When an individual is disabled, their income may be significantly impacted, so having an adjustment that increases the benefit in line with the cost of living can provide essential financial support.

This rider is often calculated based on a specific index, such as a consumer price index, and typically allows for regular increases at set intervals, which can be crucial for long-term financial stability during a period of disability. Understanding the value of such a rider is vital for individuals planning for potential future risks associated with health and income.