I recently wrote about how I've been looking for a little more disability insurance, and how I'm okay with getting a group policy to add on to my individual one, especially to avoid a climbing exclusion. Right as I was about to purchase the group policy offered through my partnership, I got junk mail from my specialty society, ACEP, as I frequently do, for their group disability policy. It's a nice policy for two reasons- it's specialty-specific (although not true own-occ, see comments section) indefinitely, unlike most group policies, and it is very cheap when you're in your 30s, although the price goes up every 5 years. In fact, this year it's almost 50% cheaper for me than the modified own-occ (specialty-specific only for two years) group policy I can get through my partnership.
This group policy also offers a cost of living allowance, which is also pretty unusual for group policies. But I had to laugh when I saw it. Here it is verbatim:
We will adjust Your Monthly Benefit for increases in the cost-of-living if:
1) You have been Disabled for 12 consecutive month(s); and
2) You are receiving benefits;
when the Cost-of-Living Adjustment is made. We make the Cost-of-Living Adjustment each year on January 1st.
We apply the Cost-of-Living Adjustment formula by:
1) determining the lesser of:
a) 3%; or
b) 1/2 the percentage change in the Consumer Price Index;
2) multiplying the resulting percentage (%) times the Monthly Benefit for Disability being received; and
3) adding the resulting amount to Your Monthly Benefit.
You will not receive a Cost-of-Living Adjustment after:
1) You cease to be Disabled;
2) You have received 5 adjustments; or
3) the date The Policy terminates.
I found this to be pretty hilarious. Why bother? First, at MOST it will give you 1/2 the change in the CPI. Why not call it “Half a COLA” because that's what it is. But the best part comes at the end. You only get it for 5 years. What the heck? The whole point of a COLA is to protect you against the ravages of inflation over decades. You want to know that if you get disabled at 35, you'll still be getting enough to live on at 60. I guess this COLA is better than nothing, but not by much. Thanks ACEP/Hartford for demonstrating why it's important to read the fine print with disability insurance policies.