What is a Cost of Living Rider?
A cost of living rider is something many insurance and financial experts recommend when you are purchasing life and/or total disability insurance. The rider itself doesn’t have a life of its own, and can only be an add-on to an already purchased plan. It rides with the plan you purchase and can’t be purchased on its own, hence its unusual name. Essentially, what the cost of living rider allows you to do is to upgrade or purchase additional insurance to cover the rising cost of living. If you purchase a specific insurance that will pay an amount that seems great in today’s market, it has a basic problem. It won’t keep pace with cost of living, and what may seem like a great deal today can down the road be inadequate to your needs. This is especially the case if you are permanently disabled, which some life and term life policies have provisions for. You may purchase insurance that would essentially cover your current salary after a disability. If you were not disabled, and had continued
