What is the function of the Social Security rider in disability income insurance?

The function of the Social Security rider in disability income insurance primarily involves the adjustment and coordination of benefits between the disability policy and any government benefits the insured may receive. When this rider is included in a policy, it establishes a limit on income benefits, ensuring that the total benefits received from both the private disability insurance and the government assistance do not exceed a specified maximum amount.

This is important because it helps to prevent overpayment to the insured during a period of disability. The rider ensures that the benefits from the private insurance will be reduced by the amount of any Social Security benefits the insured is eligible to receive. By doing so, it manages the potential overlap between the two sources of income, making the overall benefit structure more sustainable and aligned with the purpose of providing adequate financial support during periods of disability, while also adhering to the policies of government assistance programs.

In contrast, the other options do not accurately describe the function of this rider. Eliminating benefits when receiving government assistance does not align with its purpose, nor does increasing the total payout or solely replacing lost income from the insured’s primary job. The essence of the Social Security rider lies in coordinating benefits rather than replacing them or exceeding them.