Provisions to Customize Your Coverage

What Are Riders in Life Insurance Policies?

A rider is an additional provision or endorsement to an insurance policy that adds benefits or changes the terms of a basic policy. Riders give insured parties additional coverage options, or they may restrict or limit coverage.

Riders are additional benefits that can be purchased and added to a basic life insurance policy. They let you customize a policy and can provide various types of protection if you meet their conditions.

Here are some common life insurance riders and what they cover:

SOME COMMON RIDERS

Guaranteed Insurability

This allows you to purchase additional insurance coverage within a specified period without another medical exam. It can be especially helpful when your life circumstances change significantly, such as the birth of a child, marriage, or an increase in income. If your health declines with age, you can apply for additional coverage without providing evidence of insurability.

This type of rider may also allow you to renew your base policy at the end of its term without medical checks. Depending on the insurer, however, guaranteed insurability riders may terminate at a certain age.

Coverage, premium rates, and rider terms and conditions may differ among insurers. A claim for a rider's benefits may result in the rider's termination while the original policy continues providing insurance.

Accidental Death

An accidental death rider pays an additional death benefit if the insured dies as a result of an accident. Typically, the additional benefit paid for accidental death equals the original policy's face amount, doubling the benefit. If death results from accidental bodily injury, the insured's family receives twice the policy amount. That is why this provision is called a double indemnity rider.

If you are your family's sole provider, an accidental death rider may be ideal because the double benefit will help cover your surviving family's expenses.

Make sure you understand an accidental death rider's restrictions, since many life insurance companies limit the meaning of the term "accident."

Waiver of Premium

Under this rider, future premiums are waived if the insured becomes permanently disabled or loses income because of an injury or illness before a specified age. The insured is exempt from paying premiums due on the base policy until they are ready to work again.

A waiver of premium rider can be valuable, especially when the policy premium is high. The definition of “totally disabled” may vary among insurers, so pay attention to your particular rider's terms and conditions.

Family Income

If the insured dies, a family income benefit rider provides a steady income stream to family members. When purchasing this rider, you must determine how many years your family will receive the benefit. Its value is clear: following a death, the surviving family will face fewer financial difficulties thanks to the rider's regular monthly income.

Family income benefit riders are generally purchased by people who are their families' sole breadwinners.

Accelerated Death Benefit

Under this rider, the insured can use death benefits after being diagnosed with a terminal illness that will considerably shorten their life expectancy. Insurers generally advance a percentage of the base policy's death benefit to the insured.

Insurance companies may subtract the amount received, plus interest, from what beneficiaries receive at death. In most cases, a small premium is charged, depending on the insurer.

Insurers define “terminal illness” differently, so check what the rider covers before buying it.

Children's Term Rider

This rider provides a death benefit if a child dies before a specified age. Once the child reaches adulthood, the term plan can be converted to permanent insurance with coverage of up to five times the original amount without medical exams.

Long-Term Care (LTC)

If the insured must stay in a nursing home or receive home care, this rider provides monthly payments. Although long-term care insurance can be purchased separately, insurance companies also offer riders that cover long-term care costs.

Return of Premium

Under this rider, you pay a marginal additional premium, and at the end of the term, your premiums are refunded in full. In the event of death, your beneficiaries receive the amount of premiums paid.

Insurers sell return of premium riders in many variations, so make sure you understand the rider's wording before buying.

What Is an Insurance Rider?

A rider is an addition to an insurance policy that provides extra coverage or other benefits. Riders generally come at an additional cost.

How Much Does an Insurance Rider Cost?

A rider's cost corresponds to the additional coverage or benefits it provides. Most, however, are relatively inexpensive because they involve minimal underwriting and are less likely to be used by the insured.

Why Might You Not Want Riders on a Life Insurance Policy?

If you do not need or expect to use certain features or benefits a rider provides, it could be an unnecessary expense that increases your insurance premiums.

Most insurers do not allow you to modify your insurance policy to meet your individual needs, but riders can help you customize coverage.

Always read the fine print before adding a rider to a life insurance policy. If necessary, sit down with an insurance advisor to evaluate the benefits of riders and then purchase the one that best suits you and your family.

If you need more information about purchasing your life insurance policy, contact a Partners for Life agent at no cost.

Tel.: +1(855) 436-6552

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