What is the Supplemental Disability Income Rider (SDIR) on a Disability Policy?

The SDIR acts as an offset and actually helps reduce your cost, taking part of your benefit amount and discounting the cost since it will integrate with social programs such as social security and workers’ compensation. If you qualify for payment under a social plan, the insurance company will reduce the amount paid to you by the amount of monthly benefit you receive from the social program. For example, let’s say you have a disability benefit of $7,200 and $1,800 with your SDIR. You are guaranteed to get the total monthly benefit of $9,000, but the $1,800 SDIR may not all come from the insurance company. If you receive social security or workers’ comp payments, your rider will simply “top off” those payments to get you to $1,800 in benefit. The real advantage is that, even if you don’t receive social security or workers’ comp for your disability, you will still get that entire $1,800 SDIR benefit in addition to the $7,200 disability benefit.

Long-term disability (LTD) is a crucial part of your overall insurance plan, and many companies will try and load you up with benefits since they sell one product at a time and do not take an overall view of your financial strategy. Dave recommends that you have a quality LTD plan without overspending on it, since it that would dilute your ability to pay down debt and grow your savings. You also need to remember that the chances you’ll ever be out of work due to disability is still limited, so it is important to balance the expense with other priorities, such as term life insurance, health insurance, retirement planning, etc.