This no-cost rider helps keep your disability benefit aligned with normal, annual income increases you might experience when healthy. It’s applied automatically at the time of underwriting to eligible policies and provides an annual 4% benefit increase each year for six years, with no proof of income required. Each increase will include an additional premium based on your current age.

Ways to Increase Your Disability Insurance Monthly Benefit

When you obtain a disability insurance policy, it is important to secure the highest level of coverage that you can. As your income increases, your disability policy benefits need to increase as well. There are a few ways to do this;

• If your income increases dramatically, you may want to add an additional policy.
   
• If you choose the Select version of the Provider Choice policy, the Benefit Purchase Rider offers you the ability to increase your coverage every third year.
   
• If you have the FIO (Future Increase Option rider)¹, you can exercise some of your FIO to add coverage to your existing policy.
   
• If your income goes up steadily, as most do, then you want to have Guardian's Automatic Benefit Enhancement Rider (ABE Rider).

The Automatic Benefit Enhancement Rider ² is a very convenient rider that helps keep your disability insurance benefit aligned with normal annual income increases. It is applied automatically to eligible policies and provides an annual 4% benefit increase each year for six years. Each increase will include an additional premium based on your current age.

This is a great way to increase the coverage level by 24% cumulative. If you earn $100,000 and obtain a policy with a $5,000 benefit, that may be sufficient at that time. However, with the ABE Rider, you can increase your coverage up to $6,200 of monthly benefit at the end of the sixth year automatically.

Difference Between ABE & Cost of Living Adjustment (COLA)

Some people confuse ABE with a COLA (Cost Of Living Adjustment)^1,3 Rider. Many people think that with the COLA Rider, their benefit will increase each year that the policy is in force. However, that is not true.
 
The COLA Rider will increase the benefit not while you are healthy and working, but if and when you become disabled. Additionally, the  COLA Rider will increase the benefit while the policyholder is out on disability and collecting benefits, usually increasing the benefit amount each and every year. Do not get me wrong; I am not saying that you should not have the COLA Rider on your policy. You may want to have both riders- depending on your age and potential future earnings level.

It is also important to distinguish between the FIO (Future Increase Option) Rider and the ABE Rider. The FIO is a great rider for someone that is going to obtain a disability policy and whose earnings are likely to or definitely will increase substantially- not incrementally. The FIO rider does come at a cost to the policyholder. This rider must be applied for when you want to add coverage to the existing policy, income verification will be needed as well. 

So to conclude, you definitely should have the ABE Rider offered through Guardian Life’s wholly-owned stock subsidiary Berkshire Life Insurance Company of America policy- Provider Choice disability policy. It will allow you some peace of mind to know that your policy is more likely to keep up with your earnings with this rider.

¹ Optional riders are available for an additional premium. 
² Each increase will include corresponding attained-age premiums. Abe applies to the base policy, COLA, and Residual. Increases can be refused by written request or nonpayment of an increased premium.
³ This benefit is not necessarily protection against increases in the cost of living. 

This material contains the current opinions of the author but not necessarily those of Guardian or its subsidiaries and such opinions are subject to change without notice.