What Are Life Insurance Riders and Why Are They Important?

Man/Women at Table

In 2020, 54% of Americans were covered by some kind of life insurance protection. 

If you have dependents who wouldn't survive financially if you were to die suddenly, then life insurance is a must. This way they can keep the lifestyle they have grown accustomed to when they no longer have your income coming in.

There is more to life insurance than just the base policy. Life insurance policies can also include riders that provide extra benefits to better fit your needs.  While some riders can be included with the policy at no extra cost, there are those that can be added onto a policy for an additional cost. 

Read on to learn about the different life insurance riders that some companies offer and the added benefits they provide.

1. Guaranteed Insurability Rider

If you think your life will change significantly in the future (such as marriage or children) you might consider getting this rider.  A guaranteed insurability rider allows you to purchase additional coverage for specific life events without any additional medical or financial history checks.

2. Accidental Death Rider

Of course, every life insurance company has very specific definitions of what an 'accident' entails, but this is a great rider to add to your life insurance policy if you work in a dangerous job or live a risky lifestyle.

With this rider, your beneficiaries would receive additional financial benefits if you die as a result of an accident. Again, make sure you understand how your life insurance company defines 'accident'. 

3. Waiver of Premium Rider

With this rider, future premiums are waived if the policyholder loses their income or becomes disabled as a result of an injury or illness. 

Most families are dependent upon the primary breadwinner for their sustenance. Thus, not having to worry about paying the insurance premiums while maintaining the life insurance policy is of great benefit. As with accidental death, make sure you understand your life insurance company’s definition of 'disabled' or 'injured'.

4. Terminal Illness Rider

With this rider in place, you can access a portion of the death benefit to use as you see fit if you develop an unexpected illness or condition that is expected to result in death within 12 months.

5. Critical Illness Rider
If in the future, you are diagnosed with a heart attack, stroke, invasive cancer, end-stage renal failure, or major organ failure, this rider allows you to access a portion of the death benefit that can be used to help pay medical bills or other expenses.

6. Chronic Illness Rider
This rider allows you to access a portion of your policy’s death benefit early if you develop a chronic illness that prevents you from being able to perform at least 2 of 6 activities of daily living.  The funds can then be used to help pay for nursing home or home health care costs.

7. Charitable Giving Rider

When this rider is a part of a life insurance policy, the life insurance company donates an additional percentage of your death benefit to a qualified charitable organization of your choosing.

8. Child Term Rider

This rider allows you to purchase a term policy for your child, giving them a significant head-start on the way to adulthood. It is always best to insure your child as early as possible to help guarantee their future insurability.

At the end of the Child Term plan, the policy can be converted to a permanent life insurance policy without a medical exam and with five times the original face amount. 

9. Spouse Term Rider

This rider allows you to purchase term coverage for your spouse as part of your policy. Face amounts and term options are usually limited but your spouse will not have to apply separately and there is typically no underwriting required. At the end of the term period your spouse can convert into a permanent, cash-building life insurance policy without the need for a medical exam at the end of the term period giving them the opportunity to get lifetime protection.   

10. Term Insurance and Term ROP Insurance Riders

The Term Insurance rider is an add-on to whole life insurance policies that allow you to also purchase temporary life insurance coverage with premiums that remain the same for a set term period.  The benefit is you have both term and whole life insurance protection wrapped up into one, single policy.

The Term Return of Premium (ROP) rider, like the Term Insurance rider is an add-on to whole life insurance policies.  Like a regular term insurance rider, it provides temporary life insurance coverage with premiums that remain the same for a set term period. However, with Term ROP, at the end of the term, you will receive 100% of the premiums you paid for this rider back tax-free!

11. Long-Term Care Rider

If you need to stay in a nursing home or a long-term care home, then this rider would give you monthly payments to allow you to afford to stay in such facilities. This provides you relief with your long-term care costs.

Importance of Life Insurance Riders 

If you are looking for a life insurance policy to fit your needs, consider what rider options are available because they will allow you to truly customize your coverage to purchase the financial protection you need. 

Interested in purchasing life insurance policies with riders to further protect you and your family members, then check out our life insurance products today!
 

Our content is created for educational purposes only. This material is not intended to provide, and should not be relied on for tax, legal, or investment advice. Vantis Life encourages individuals to seek advice from their own investment or tax advisor or legal counsel.