To trim the price of paying for disability insurance, consider doing without a cost-of-living adjustment (COLA). This is often the most expensive rider available on a disability insurance policy and may not be necessary if you’re over the age of 45 or 50. A COLA is designed to protect you against inflation and after that age you are not as much at risk for inflation as you were in your younger years.
In disability insurance, a COLA does not take effect until after a claimant has been receiving disability benefits for a year. Subsequently, the benefits increase by the rise in the consumer price index (CPI) but there is a maximum, maybe 3 percent per year, set in the rider. The CPI has been low lately but the cost of these riders can be high. Nevertheless, younger people may want a COLA rider because they have the potential to be disabled for a longer time, and a permanent disability might be devastating.
