Cost of Living Adjustment (COLA) Rider
A disability rider increasing monthly benefits after a claim begins, by an index or fixed percentage, protecting long benefit periods from inflation.
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A cost-of-living adjustment (COLA) rider on a life insurance policy serves to:
Increase the policy's coverage or benefits to keep pace with inflation — A COLA rider automatically increases the amount of coverage or benefits on a policy to help offset the effects of inflation, often tied to an index such as the Consumer Price Index. On a life policy it can raise the death benefit, and on disability riders it can increase monthly benefits. The rider typically requires no evidence of insurability for the increases and is designed to preserve the purchasing power of the protection over time. Because the increases are automatic, the owner does not need to apply or prove insurability each time, which is a meaningful convenience for keeping coverage in step with rising costs.
National insurance concept
A cost-of-living adjustment (COLA) rider on a life insurance policy is designed to:
Increase the death benefit periodically to keep pace with inflation — A cost-of-living adjustment (COLA) rider periodically increases the policy's death benefit to offset the effects of inflation, typically tied to an index such as the Consumer Price Index (CPI), with some policies applying a fixed annual percentage. The rider helps ensure that the insurance protection keeps its purchasing power over time. The additional coverage may require slightly higher premiums, and the increases are often limited to a specified maximum percentage each year. COLA riders are commonly offered on disability income policies and can also be added to life insurance.
National insurance concept
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