Which disability policy provision addresses concerns about the decreasing value of benefits over time?

The cost of living benefit is a provision in disability insurance policies specifically designed to address the concern that the value of benefits may decrease over time due to inflation and rising living costs. This provision allows the disability benefits to increase periodically, often in line with the Consumer Price Index or a fixed percentage, ensuring that the purchasing power of the benefits is maintained even if the policyholder remains disabled for an extended period.

This is particularly important in long-term disability situations where inflation can erode the value of the benefits, making it challenging for individuals to cover their living expenses. By including a cost of living benefit, insurance policies offer a safeguard that helps policyholders maintain their standard of living throughout the duration of their disability.

In contrast, other provisions such as the residual benefit, recurrent disability benefit, and waiver of premium serve different purposes, such as providing partial benefits based on income loss, addressing repeated claims for disability, or allowing policyholders to suspend premium payments during a period of disability, respectively. None of these directly address the issue of benefit value diminishing over time due to inflation.