When COLA Is Not A Coke

Disability Income Protection coverage is important to you as a specialist in Emergency Medicine, Anesthesia, Otolaryngology, Neuro Surgery and all of the other medical specialties.  You know that it provides you an income stream if you become disabled, but unless you already have a solid financial foundation and substantial savings it will most likely not cover your expenses if your disability is long term.  This is when we add a rider called the Cost of Living Benefit (COLA).

The Cost of Living Benefit or COLA as it is call in the industry is a product that offsets the impact of inflation on the benefits of your policy.  A COLA rider will adjust for inflation annually after 365 days of disability and every year thereafter.  It is customarily calculated by the consumer price index. The Consumer Price Index calculates the increase in cost of goods most commonly purchased by consumers from year to year. In other words, it puts a figure to the inflation you incur for typical purchases annually.

Every insurance provider has their own version of a COLA rider. They might adjust annually based on the fixed percentage determined from expected inflation. Other benefit packages will compound annually. In either case, it is important to be note that this important option is available to you. Yet as I mentioned earlier if your nest egg is solid and can cover the added expense brought on by inflation you may not need it.  Always talk with your insurance specialist and evaluate the need.  It might be necessary (and usually is) in the beginning of your career, but something that can be dropped as you become more financially stable.

Should you have any questions about this or any other disability protection topic please contact us at IncomeProtectionSpecialist.com.  We are always here to help.