Having life insurance is a great way to ensure those who matter most to you will be protected if you pass away. One of the best ways to make sure your policy offers the right coverage for your loved ones is by customizing it with life insurance riders. Riders are optional provisions you can add to your life insurance policy to provide extra coverage. In this article, we’ll help you understand what riders are, how they work, and the different types of riders available to you.
What is a life insurance rider?
Life insurance riders are additional provisions or features that can be added to a basic life insurance policy to customize or enhance its coverage to your specific needs. Riders offer policyholders the flexibility to tailor their life insurance coverage to address particular circumstances, preferences, or financial goals. They’re also a cost-effective way to address specific coverage needs without the need to purchase separate life insurance policies.
Eight Types of Life Insurance Policy Riders
There are a variety of riders you can choose to add to your life insurance policy. The type of rider you choose will depend on your unique circumstances and coverage priorities. 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 you’ve gone through significant life changes, 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 from 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 standalone 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
If you are interested in adding a rider to your policy but aren’t sure where to start, let SelectQuote help. Our licensed insurance agents will take the time to get to know you and your needs to provide trusted guidance on the right types of riders for your situation. We work for you, not the carriers, so you can feel confident knowing that we’ll help you find the coverage you need at a price that works for your budget.
