Life Insurance Riders
There are times that your insurance coverage is limited due to the policy set by the insurance company. If you want to increase your coverage, you will need to buy life insurance riders, which are additional benefits that policyholders can buy and blend based on their present and future insurance needs. But buying these riders means paying an extra premium, although the latter is generally lower because there is only little underwriting that is required.
Below is a list of the most common insurance riders that can be purchased:
1. Guaranteed Insurability Rider (Renewal Provision)
This rider allows customers to purchase additional insurance coverage together with their base policy in the period that is stated in the policy without the need for additional medical examination. It is very advantageous, especially when there are significant changes in your life circumstances, like childbirth, marriage, or income increases. When your health state declines because of aging, you will be able to apply for extra coverage without showing them any evidence of insurability.
2. Accidental Death or Double Indemnity Rider
This rider is an additional amount of death benefit if the insured dies due to accident. In this case the family of the insured gets twice the amount, thus, the name double indemnity. This rider is ideal for those who are the sole income provider for their families, as this will double the benefits that beneficiaries will get.
3. Spouse Insurance Rider
This rider offers term insurance for your husband or wife.
4. Waiver of Premium Rider
In this type of rider, future premiums are waived off if the insured becomes permanently disabled or loses his/her income because of injury or illness prior to a specified age. In this case, the rider exempts the insured from paying the premium until he/she is ready to work again. But it is important to become aware of the definition of “totally disabled”, as this may vary from one insurer to another.
5. Family Income Benefit Rider
Under this rider, the rider provides a steady flow of income to the family members if the insured dies. When buying this rider, it is important to determine how long family members are going to receive the income benefit.
6. Accelerated Death Benefit Rider
If the insured is diagnosed with a terminal illness, thus, possibly shortening his/her lifespan, the insurance company may advance 25-40 percent of the death benefit. It is important that the insurer subtract the amount he/she receives, plus the interest from what his/her beneficiaries may receive. Just like with the waiver rider, different companies have their own definition of “terminal illness.”
7. Child Term Rider
This rider provides a death benefit to a child in case he/she dies before a predetermined age. This term plan can be converted to a permanent insurance once the child attains maturity .
8. Long Term Care Rider
This rider offers monthly payments in case the insured stays in a nursing home or receives home care due to unfavorable health.
9. Return of Premium Rider
The aim of this rider is to give back to the insured most of the premium that he/she has already paid. At the end of the term, the premium will be returned in full to and in the event of death, the beneficiaries get the premium.
Since most insurance companies will not give their members the liberty to modify the latter’s insurance policies, a rider is then important since it empowers insurance plan holders with the control they need in their ever-changing life situations.