Which provision addresses inflation concerns in disability benefits?

• A. Wavier of premium
• B. Nonforfeiture provision
• C. Cost of living benefit
• D. Guaranteed renewable clause

Answer: (C)

Inflation protection in disability benefits is handled by a cost of living benefit. This rider or provision automatically raises the monthly benefits over time to keep pace with rising prices, often tied to an index like the Consumer Price Index or a fixed percentage. The goal is to preserve the real purchasing power of the benefits for someone who is disabled for a long period, since flat benefits can lose value as costs go up.

Wavier of premium focuses on continuing coverage by waiving premiums during disability, but it doesn’t increase the benefit amount. Nonforfeiture provisions relate to life insurance policies’ cash values and surrender rights, not disability income payments. Guaranteed renewable ensures the policy can be renewed, but it doesn’t automatically adjust benefits for inflation.