What A Life Insurance Rider Allows An Individual To Do

Have you ever wondered what a rider is for insurance policies? Simply put a rider is an extra benefit or slight change to an insurance policy. Riders can be added at the time of application and help give more protection or improve the basic function of the policy.

A life insurance rider that allows an individual to buy extra life insurance for example could be referring to the paid-up additions in a whole life policy, extra life insurance for themselves at renewal, or other options. Here are some of the riders to be explained later on: waiver of premium, accelerated death benefit, long-term care, return of premium(ROP), guaranteed insurability, child term, family income, and paid-up additions rider.

Even though riders add additional benefits to a life insurance policy they rarely require extra underwriting, though they do have a small fee for each.

1. Waiver of premium

If you become permanently disabled this rider waives the need to pay premiums due to accident or illness. This rider may only be good until a certain age. A good option for larger premium policies.

2. Accelerated death benefit

If you get diagnosed with a terminal illness this rider will then pay you a portion of the death benefit while alive. The diagnosis has to have a life expectancy of 24 months or less.

3. Long-term care

You never know when or if you’ll need to stay in a nursing home or receive home care so this rider is a good option to take in the event of becoming sick or disabled later in life. This rider is also offered commonly as a separate insurance policy so before taking it as a rider check what a standalone policy would cost and offer.

4. Return of premium(ROP)

This benefit returns to you all the premiums you have paid into a policy if you are still alive and pays them to your beneficiary if you have passed away. Typically a really affordable option for younger individuals getting a term insurance policy.

5. Guaranteed insurability

Just as the name implies this rider guarantees your insurability later in life without the need for a new application and underwriting process. This is a great way to increase your policy amount at later dates. Maybe a good option for those with a family history of health concerns, particularly those that may keep you from qualifying or increase rates after a diagnosis.

6. Child term

A child term rider adds coverage to a policy if a child dies prior to a specified age. It can be converted into permanent insurance when your child becomes an adult with no medical exam needed. The standard coverage amount is five times the initial term insurance face value.

7. Family income

The family income rider will provide an income stream to your family in the event of your death.

8. Paid-up additions rider

When dividends are declared the PUA rider uses those dividends to buy additional death benefits for the policy.

9. Accidental death benefit

An accidental death benefit increases the payout often times it doubles the death benefit if you die from an accident either directly or indirectly.

10. Paid-up additions

This rider is offered on permanent life insurance policies and provides you the ability to buy additional death benefits. This helps the policyholder because the paid-up additions earn dividends in the following years. It also allows a policyholder to put more cash value into the policy.

11. Term rider

A term rider is an addon that lets you either add death benefit for the policyholder or add death benefit covering another person.

12. Waiver of cost of insurance

Some universal life insurance policies have an option for a rider that covers the cost of insurance for the policy its called a waiver of the cost of insurance (go figure).

13. Critical illness rider

This rider pays a part of the death benefit to a policyholder in the event of becoming critically ill.

14. I just had to put another number here so it didn’t end at 13 riders.. just for all those superstitious individuals.

Things to consider before adding Riders

Not all riders are offered by all insurance carriers. In addition, the benefits of each are not all the same from one carrier to another.

Even if a company does offer a rider it is sometimes more affordable or offers better benefits to get a standalone policy if available.

Lastly, when getting a life insurance policy and looking at the riders make sure you qualify for the rider first off and make sure you read the terms for each one to fully understand what it does and is what you want.