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Common Life Insurance Rider Policies
Life insurance is a complex topic that takes many different considerations into mind. First, you need to figure out what the appropriate amount of coverage is for you. Next you must determine what type of policy fits your needs. Many types of life insurance policies offer various add-ons, also known as "riders," that may be tacked on to your policy to provide you with additional benefits.
Not all life insurance riders make sense for every individual and not all policies provide every type of rider. Check out our list below for some of the most common riders today. Are any of them appropriate for you?
Disability Waiver of Premium Rider
Should you become totally disabled and can no longer work, this rider waives the premiums due on your policy yet the policy continues to “perform” as if premiums have been paid. Keep in mind that this type of rider typically expires once you hit a certain age.
Disability Income Rider
Let’s say you become disabled and are unable to work. If you had added the Disability Income Rider, your life insurance company would provide you with a monthly check to replace a portion of your income. The period and amount for which the check is paid varies and would be determined at the time of purchasing the policy.
Term Conversion Rider
A term conversion rider is one that is usually inherent in a term life insurance policy. With this rider, you may convert your existing term life insurance policy into a permanent life insurance policy in the future. Some are for a certain period of time from the policy date while others expire at a certain age. Want to hear the best part though? You can do this without needing to take another medical exam! What that means is that the permanent policy is issued with the same underwriting class as your initial policy so if your health is a little less robust than when you took out the term policy, this rider is for you!
Accelerated Death Benefit Rider
When someone is diagnosed with a terminal illness and has no more than two years to live, medical costs can add up quickly. This rider allows you to tap into your policy's death benefit early. You can use the proceeds now to cover out-of-pocket medical costs, take a last family vacation, or for whatever you wish. And since the funds are still classified as death benefits, you enjoy them income tax-free.
Long-Term Care Rider
This rider is similar to the accelerated death benefit rider above, as it would allow for accelerated access to the death benefit. The difference is that instead of you becoming terminally ill, this rider would be used should you become chronically ill and unable to work. The death benefit funds that would be provided to you would go toward paying for long-term care i.e., a nursing home, an assisted living facility, or home health aide services.
Critical Illness Rider
A critical illness rider would provide a lump sum should you have a medical condition that is expensive AND falls under one of the critical illnesses stated in your policy. While this rider may sound similar to the long-term care rider, the difference is that this rider would accelerate a portion of the death benefit to be used for a one-time covered critical illness and the procedures that go along with it.
Accidental Death Benefit Rider
This rider is exactly as it sounds. Should you die in an accident, your beneficiary would receive additional funds on top of the policy’s normal death benefit. Keep in mind that rates for this rider would vary based on your occupation and the risks involved.
Remember, insurance riders vary by insurance carriers in addition to the type of policy you purchase. As mentioned earlier, not every rider makes sense for every person and depending on your age, health, gender, and policy amount the cost per policy may vary.
Related reading: How to Determine the Amount of Life Insurance You Need
To learn more about life insurance and the riders available to you, call 866-496-2657 or click here to chat with a licensed agent today.
Joan Cleveland, CLU, ChFC, REBC
Joan Cleveland, CLU, ChFC, REBC leads SWBC Life Insurance Company as President and CEO. With more than 30 years of experience in the life insurance industry. She holds her Agent licenses for Life, Accident, Health Insurance, and has multiple FINRA securities Licenses. Joan is a frequent industry speaker and media spokesperson. She is a member of the Board of Directors of the Consumer Credit Insurance Association, the Texas Association of Life and Health Insurers, as well as the Life Insurers Council. In addition, she is chair of LIMRA’s Strategic Marketing Issues Committee.
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