Life Insurance Riders

A basic life insurance policy provides financial security for your loved ones after you die. It can keep them from being burdened by your debt or funeral expenses. However, there are times when you require more than just a basic policy.

If this is the case, you can add extra benefits to your life insurance policy by purchasing a life insurance rider. In this article, we'll define a life insurance rider, discuss the different types of riders available, and discuss whether they're worth the extra cost.

What is an insurance rider?

An insurance rider is an add-on policy that extends the terms and conditions of your policy by providing additional coverage. Many life insurance riders, for example, allow you to use the money from your policy before you die. Life insurance companies sell a variety of riders that you can use to tailor your coverage to your specific needs.

As a policyholder, you have the option of purchasing as many riders as your life insurance provider offers. That means you have complete control over the amount of coverage you have. However, each rider you add will raise your premium. Some riders may be worthwhile, while others will not provide any significant benefit.

Types of life insurance riders

There are many different types of life insurance riders. Here are some of the most common ones:

Accelerated death benefit rider

One of the most common life insurance riders is an accelerated death benefit rider. It enables the policyholder to use their death benefits if they are diagnosed with a terminal illness that could result in their death prematurely. Each insurance company has its own list of covered terminal illnesses, so it's important to check to see what's covered before adding this rider. Another advantage of the accelerated death benefit rider is that many insurance companies provide it for free.

Long-term care rider

A long-term care rider will help you cover the monthly payments if you need to stay in an assisted living facility or receive home care as you get older. Nursing homes, adult day care centers, hospice, and memory care facilities are examples of qualifying long-term care facilities. Some insurance companies allow the policyholder's family members to use the long-term care rider.

Accidental death rider

Your beneficiaries receive compensation from your policy's death benefit after you die. However, if you die as a result of an accident, an accidental death rider will allow your beneficiaries to receive twice the amount of money in the policy. Remember that not all accidents are covered. Dangerous activities, such as skydiving, are not covered. However, if you work in a factory and are fatally injured by equipment or machinery, you may be eligible.

Waiver of premium rider

If you become disabled or lose your income as a result of an injury or illness, the waiver of premium rider allows you to discontinue paying your monthly premium. When you are able to return to work, you will be required to resume making payments. The only stipulation to the waiver of premium rider is that you are only covered until a certain age—typically until retirement.

Guaranteed insurability rider

To be approved for a life insurance policy, you must first complete and pass a medical exam. With a guaranteed insurability rider, you can change your coverage without having to take another medical exam. This rider is particularly useful because it allows you to apply for additional coverage if your health deteriorates without requiring a reevaluation.

Return of premium rider

With a return of premium rider, you pay a small monthly premium and then recoup the money when your policy's term expires. If you die before the end of your term, your beneficiaries will receive the money. This is typically one of the most expensive riders available.

Family income benefit rider

Consider purchasing a family income benefit rider if you are the only earner in your family. This add-on policy will provide your family with a consistent income after you die, in addition to the lump sum from the death benefit.

Child term rider

A child term rider will pay out a death benefit if a child dies before reaching a certain age. Only term life insurance policies are eligible for this type of rider. When the child reaches the age of majority, the term policy can be converted into a permanent life insurance policy with up to five times the original coverage without requiring a health exam.

Are insurance riders worth it?

Life insurance riders will raise your premium, so you may be wondering if it's worth it. In the end, it comes down to your personal needs and financial situation. You probably don't need to buy every rider your insurance company offers.

For example, if you have a child who is afflicted with a serious illness, you may want to consider purchasing a child term rider. However, if you do not have children and do not intend to have them in the future, that rider is useless.

Furthermore, keep in mind that each rider will raise your premium by a different amount. A return of premium rider is one of the more expensive riders available, and it provides very little value for the money spent. However, if your insurance company offers an accelerated death benefit rider at a low or no cost, it's probably worth adding.

Frequently asked questions

What is the best life insurance rider?

Because life insurance riders allow you to tailor your insurance coverage, the best life insurance rider is the one that best meets your specific requirements. Consider a long-term care rider, for example, if you are concerned about being able to afford the cost of assisted living later in life. If you are the sole provider of income for your family, obtaining a family income rider will ensure that your family is financially secure if you die.

Can family members take advantage of my life insurance riders?

Yes, some riders are intended to cover family members and beneficiaries rather than the policyholder. Before purchasing a rider, make sure you understand what is covered and who is covered. Each insurance company has different terms and conditions for the riders they sell.

How many life insurance riders can you purchase?

You can buy as many life insurance riders as you want, but you probably won't need to buy every rider your insurer offers. Keep in mind that adding a life insurance rider will raise your premium. The more riders you have, the more coverage you have, but you'll pay a premium for that extra security.