A life insurance policy can provide incomparable peace of mind that your family and loved ones are supported financially if anything were to happen to you. Life insurance riders are optional additions you can add to your policy to help boost your coverage in areas you need it most. This article can help you understand the different types of life insurance riders and how they can customize your coverage to work for your family and loved ones.
What is a life insurance rider?
Life insurance riders are a supplemental benefit added to life insurance policies as a way for policyholders to customize their coverage. Riders give the policyholder the opportunity to adjust their coverage and account for unexpected events that may not automatically be in their policy.
8 Types of Life Insurance Policy Riders
There are different types of riders that you can add to your life insurance policy. The most common types of life insurance riders include:
- Guaranteed Insurability Rider: The guaranteed insurability rider lets you purchase additional coverage during a set period of time without having to take another life insurance medical exam. This rider is helpful if there has been a significant change in your situation, such as an increase in income, a new child or marriage.
- Accidental Death Benefit Rider: The accidental death benefit rider provides an additional payout if the insured dies as the result of an accident. Depending on the carrier, this payout can often be up to $250,000 but cannot exceed the face amount of the policy. An accidental death benefit rider is also available as an individual policy.
- Waiver of Premium Rider: The waiver of premium rider continues coverage without any further premium payments if the insured becomes completely disabled. This rider may be added at an additional cost to a life insurance policy.
- Family Income Benefit Rider: The family income benefit rider provides money to the insured’s beneficiaries that is equal to the policyholder’s monthly income for a specified number of years. Instead of being paid in a lump-sum, the beneficiary receives monthly installments in addition to the death benefit. This type of rider is one way the policyholder can determine the distribution plan.
- Accelerated Death Benefit Rider: In case of a terminal illness expected to cause the insured’s death (usually in one year or less), the insured has the option to receive a portion of the benefit prior to death. The accelerated death benefit is typically 50% of the face amount or $250,000, whichever is less. The rider is initially provided at no cost, but once exercised, a small administrative fee will usually be charged.
- Child Term Insurance Rider: A child rider provides a death benefit to parent(s) upon the death of any dependent children. A flat premium is charged, which includes all specified children equally.
- Long-Term Care Rider: A long-term care rider offers monthly payments in the event that the insured has to stay in a nursing home or receive in-home care.
- Return of Premium Rider: The return of premium rider gives back all premiums that have been paid at the end of the term policy if the policyholder outlives the policy. This rider can increase the cost of your policy substantially and many carriers will exclude premiums paid for riders or any extra charges for higher-risk clients.
What is the benefit of riders on a life insurance policy?
The benefit of adding riders to your life insurance policy is to ensure you and/or your beneficiaries have ample coverage if something were to happen to you. The amount of assurance often depends on the type of rider, the type of coverage you need and how much more you can afford to pay on your policy. Sometimes a stand-alone policy can provide more coverage than a rider, but some riders can be worth the additional expense.
Learn More About Life Insurance Riders with SelectQuote
The easiest way to determine what life insurance riders might be right for you is by working with SelectQuote. While there are a number of things to consider before buying life insurance, we’re here to make the process simple. We’ll take the time to understand your situation and can help determine what life insurance riders may be beneficial to you and your family. We want you to feel confident that your life insurance policy meets all your needs and fits your budget.