Life Insurance Riders
Life insurance policies can be very complicated documents at times, and that is why it is so important to always read the fine print. Understanding the terms of the policy will not only help you make the right coverage choice – it will also help prevent any unpleasant surprises down the road.
One of the most important, and most misunderstood, parts of the life insurance policy is the life insurance rider. In its simplest terms a life insurance rider is a modification to the policy. The rider is attached at the time the policy is written, and it can either add or limit the benefits of the policy depending on the specific provisions of the rider.
The life insurance rider is used in order to provide some sort of benefit that is important to the insured. In some cases these additional benefits will come with an additional cost attached, so it is important to weigh the cost and benefits carefully. It is always a good idea to ask the insurance agent to price the policy and the riders individually so that an intelligent assessment can be made.
The number of riders that can be added to a policy is almost limitless, but the riders that are most commonly used include:
– Accidental Death Double Indemnity – this common rider means that the beneficiaries will receive twice the usual death benefit of the insured is killed in an accident.
– Mortgage Protection – this rider is used to attach a mortgage life insurance policy to the main policy. The proceeds of the mortgage life insurance policy can be used to pay off the family home if the insured dies.
– Waiver of Premium – this rider allows the insured to stop making premium payments in the event of a permanent disability. When considering this type of rider it is important to be clear on the life insurance company’s definition of disability. Some policies define a disabled person to be one incapable of doing any work at all, not just the job he or she previously held.
– Guaranteed Insurability – this type of rider is often attached to a whole life or universal life policy, and it guarantees the right to purchase a new policy regardless of health status.
– Accelerated Death Benefit – this rider allows part of the death benefit to be paid if the insured has been diagnosed with a terminal illness.
No matter what type of life insurance riders are desired it is always important to weigh their costs against the potential benefits they can provide. In some cases it may be possible to get the same type of protection through other means like outside investments and other insurance. . In other cases adding a life insurance rider will make an already valuable policy even more so. The key is to be an informed consumer – one who understands what riders are, how they work, and how they can be used to add value to the insured and his or her beneficiaries.