Life insurance policies can contain additional features that allow you to customize your coverage. Commonly referred to as policy riders or special endorsements, these features can be attached to a basic policy contract to enhance the flexibility and fit of the policy to meet your specific needs.
To help you understand more, we've put together a short list of common life insurance policy riders, along with the definition and key benefits they can provide. It's important to note that this is only a partial list of common riders and that not all insurance companies offer the same type of benefits. In addition, riders are subject to underwriting and may not be available with certain health conditions or occupations.
Types of policy riders
Accidental death benefit rider
An accident death benefit rider pays out an additional death benefit to the beneficiary (that's above the current benefit limit of the policy) if you should die as a result of an accident. If you're concerned about accidental death or you work in a potentially hazardous occupation and can't afford to buy sufficient life insurance coverage, adding this rider may be a more affordable option.
Accelerated death benefit rider
An accelerated death benefit rider allows you, as the policyholder, to use all or a portion of the policy death benefit for various expenses in the event you are diagnosed with a chronic, critical, or terminal illness. If you've been diagnosed with a certain disease or are suffering from an illness that significantly affects the quality of your life and need cash, the insurer will pay out the benefit prior to your death. It's important to note that the insurance company will place restrictions regarding the health conditions that qualify for payment under an accelerated death benefit.
Waiver of premium rider
If you become totally disabled, unable to work and can't afford to pay your life insurance premiums, a waiver of premium rider allows you to stop paying premiums and still continue your policy until you are able to return to work full-time. Your life insurance policy remains in force - just as if you were making premium payments yourself. However, you will be required to prove you are totally disabled as defined by your policy rider.
Disability income rider
The disability income rider provides a supplementary income benefit if you were to become totally disabled, as defined under the policy rider. Typically, the disability income benefit is specified as a percentage of the face amount, and is payable monthly. For example, if the face amount of your policy is $50,000 and the disability income benefit is set at one percent, the rider would pay you $500 per month.
Additional purchase option (guaranteed insurability rider)
If you are unable to afford the amount of life insurance you need today, adding this rider allows you to purchase additional life insurance at a later date without having to prove your insurability. However, purchase options can be made only at specified times or for certain life events such as a marriage or the birth or adoption of a child. Because you never know how your health could change, and if you think you might want to purchase more insurance later, this may be a good option.
Term insurance rider
Added to a Whole Life or Universal Life policy, a term insurance rider can provide a fixed amount of term insurance for a specified period of time. If you have a temporary need for additional life insurance above the current face value of your existing policy and want an affordable way to have coverage, considering a term rider might be a solution for you.
Children's term rider
A children's term rider allows you to add term life insurance coverage on all children - natural, adopted and stepchildren. You may find this to be an affordable way to extend the benefits of your policy to your children. Coverage is typically available for children 15 days of age to 18-25 years of age, depending on carrier.
Some of these common riders and endorsements come standard and may be automatically included with your policy at no additional charge, while others require you to pay an additional premium. There are also specific riders that can only be added at the time the contract is written and can't be endorsed onto the policy once it has been issued. Because life insurance products and companies differ, not all riders and endorsements presented here are offered under every life insurance policy contract or offered by every insurer.
Getting the life insurance coverage you need … today
As you age, it gets more expensive to buy life insurance. Moreover, certain health conditions can make premiums increase - or worse, make it difficult to qualify for life insurance coverage at all.
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