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Life Insurance Riders

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A basic life insurance policy allows you to care for your dependents and loved ones financially after you die. However, a basic life insurance policy may not cover all of your needs. If you would like to add coverage and benefits, you may want to look into life insurance riders.

Life insurance riders are available for a wide range of scenarios. For instance, a waiver of premium rider will help pay your premium every month if you become disabled and have to stop working. This article can help you understand what life insurance riders do, who they may help and which riders are available.

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  • You may want to look into family medical history to decide whether you’d like to purchase a rider. If you have a history of life-threatening, genetic diseases, you may want to look into options such as the long-term care rider or the accelerated death benefit rider.
  • If you have a large family and are the only one earning a salary, you may want to consider the family income benefit rider. This rider pays a yearly income — in addition to the lump sum payout — to the family after the policyholder passes away.

What is an insurance rider?

An insurance rider is an add-on policy that provides additional coverage and extends the terms and conditions of your policy. For instance, many life insurance riders allow you to use the money from your policy before you die. Life insurance companies sell a variety of riders which you can use to personalize your coverage based on your needs.

As a policyholder, you can purchase as many riders as your life insurance provider sells. That means you have full control over how much coverage you have. However, each rider you add could cause your premium to increase. Some riders might be worth the money, while others may not add significant benefit.

Types of life insurance riders

Insurance riders are meant to personalize your coverage if basic life insurance doesn’t quite meet all your needs. There are several options for life insurance riders, so you’ll likely want to do your research to find out which type might be best for you. Below are the most common life insurance riders:

Accelerated death benefit rider

An accelerated death benefit rider is one of the most popular life insurance riders. It allows the policyholder to use their death benefits if they get diagnosed with a terminal illness that could cause an early death. Every insurance company has their own list of covered terminal illnesses, so you may want to see what’s covered before adding this particular rider. Another perk of the accelerated death benefit rider is that many insurance providers offer it at no additional cost.

Long-term care rider

If you need to stay at an assisted living facility or receive home care as you get older, a long-term care rider could help you cover the monthly payments. Some examples of qualifying long-term centers are nursing homes, adult day care, hospice and memory care facilities. Some insurance companies allow the long-term care rider to be used for family members of the policyholder. There are two types of long-term care riders: reimbursement riders and indemnity riders. A reimbursement rider can help pay the cost of your long-term care expenses every month — up to the policy’s limit — whereas an indemnity rider is a predetermined amount of money that is paid out monthly, regardless of the total cost of your long-term care.

Accidental death rider

After you pass away, your beneficiaries receive compensation from your policy’s death benefit. However, if your death is due to accidental bodily injury, an accidental death rider may allow your beneficiaries to receive double the amount of money in the policy. Keep in mind that not all accidents are covered. Risky activities, like skydiving, are not covered. However, if you work in a factory and are fatally injured by equipment or machinery, your beneficiaries would likely receive a death benefit. This rider may also be called “accidental death and dismemberment” or “double indemnity” by insurance companies and agents.

Waiver of premium rider

If you become disabled, or lose your income due to injury or illness, the waiver of premium rider typically allows you to stop paying your monthly premium. When you’re able to go back to work, you’ll be required to start making the payments again. The only contingency to the waiver of premium rider is that you’re only covered up to a certain age — typically until the age of retirement.

Guaranteed insurability rider

In order to get approved for a life insurance policy, you often need to complete and pass a medical exam. With a guaranteed insurability rider, you can typically adjust your coverage throughout your lifetime without needing to take another medical exam. This rider is especially valuable because it allows you to apply for additional coverage if your health declines without a reevaluation.

Return of premium rider

With a return of premium rider, you pay a small monthly premium and when your policy’s term ends you recoup the money paid. If you pass away before the term is up, your beneficiaries should receive the money. This is typically one of the most expensive riders you can purchase.

Family income benefit rider

If you are the only person in your family that has an income, consider purchasing a family income benefit rider. This add-on policy can help provide a consistent income to your family after you pass away, in addition to the lump-sum they’ll receive from the death benefit.

Child term rider

A child term rider will pay out a death benefit in the event that a child passes away before a certain age. This type of rider is only available for term life insurance policies. Once the child becomes an adult, the term policy can be converted into a permanent life insurance policy with up to five times the amount of original coverage without them needing a health exam.

Additional life insurance riders

Life insurance riders help build out your standard coverage. While the riders listed below may not be the most common, they could be useful for people in specific circumstances. These riders include:

  • Chronic illness rider: If a policyholder is diagnosed with a chronic or terminal illness, they could receive a payout.
  • Spousal rider: This rider provides a payout if the policyholder’s spouse dies. However, this may not be the most secure option. If the policyholder dies before their spouse, the spouse will not receive a payout and may fare better with their own policy.
  • Disability rider: A disability rider could pay out a monthly income if the policyholder becomes disabled.

Are insurance riders worth it?

Life insurance riders will often increase your premium, so you might be wondering if it’s worth the added cost. Ultimately, it depends on your personal needs and your financial situation. Chances are, you don’t need to purchase every rider that your insurance company offers.

For instance, if you have a child who suffers from a serious illness, you might consider purchasing a child term rider. If you don’t have children and don’t plan on having them in the future, you may find another rider most beneficial to your circumstance.

Additionally, consider that every rider may increase your premium by a different amount. A return of premium rider, for example, is one of the most expensive riders you can buy. Many customers find that this rider offers minimal value, unless their insurance provider offers an accelerated death benefit rider as well.

Frequently asked questions

What is the best life insurance rider?

Life insurance riders allow you to personalize your insurance coverage, so the best life insurance rider is the one that best covers your specific needs. For example, if you’re worried about being able to afford the cost of assisted living later in life, consider a long-term care rider. If you provide the only income for your family, getting a family income rider will ensure your family is taken care of financially if you pass away.

Can family members take advantage of my life insurance riders?

Yes, certain riders are designed to cover family members and beneficiaries, rather than the policyholder. Every insurance company has different terms and conditions for the riders they sell, so make sure you understand what is covered and who is covered before purchasing a rider.

How many life insurance riders can you purchase?

You can purchase as many life insurance riders as you want, although you probably won’t need to buy every rider available. Most riders will add cost to your overall premium. The more riders you have, the more coverage you have, but you may pay a significant amount for that added protection.

Can my spouse get life insurance through a rider on my policy?

If you add a spousal rider to your life insurance policy, it could provide a payout to you if your spouse dies. However, if you die before your spouse, no beneficiary will receive a payout for your spouse’s death. For this reason, both spouses may want to purchase their own life insurance policies.

Written by
Elizabeth Rivelli
Insurance Contributor
Elizabeth Rivelli is a contributing insurance writer for Bankrate and has years of experience writing for insurance domains such as The Simple Dollar, and NextAdvisor, among others
Edited by
Insurance Editor