How does a Cost of Living Adjustment Rider benefit the insured?

The Cost of Living Adjustment (COLA) Rider is designed to help maintain the purchasing power of the insured's benefits over time. When an insured individual has this rider, their monthly benefits automatically increase after claim payments begin, typically in line with an index that reflects inflation or the cost of living. This is particularly important because, without such adjustments, the real value of fixed benefits can diminish over time due to inflation. Therefore, having a COLA rider ensures that the benefits keep pace with rising costs, thereby providing more effective financial protection and support to the insured.

This feature is essential for long-term disability policies and other insurance types where benefits may be paid out for extended periods, as it protects the financial stability of the insured in the face of economic changes.