What does the Cost of Living Adjustment (COLA) rider provide?

• A. Automatically adjusts disability benefits to keep pace with annual inflation
• B. Provides an extra death benefit for inflation
• C. Increases premiums over time
• D. Reduces benefits during inflation

Answer: (A)

COLA stands for a rider that keeps disability benefits aligned with rising costs. The main idea is to protect the buying power of your monthly disability income by automatic increases each year, tied to an inflation measure such as the Consumer Price Index. As the cost of living goes up, your benefit rises too, so you don’t lose purchasing power over time. This rider is not about adding a death benefit, it doesn’t inherently increase premiums as a purpose, and it doesn’t reduce benefits during inflation—the goal is the opposite: to preserve benefit value in the face of inflation.