The purpose of life insurance is to protect yourself financially in the event of a catastrophic event by shifting the risk to a third party (the insurance company) – the policy creates cash for the beneficiary upon the death of the insured. On top of it’s main purpose, carriers may offer extra benefits to add to the structure of the policy known as “riders.” Carriers may charge an additional fee added to the premium when certain riders are added to a policy.
Some of the most common riders that are added to a life insurance policy are:
- Term Insurance Rider – this rider can be seen as an available option on permanent coverage policies that allows you to buy additional term insurance to supplement your permanent insurance. This rider is typically used by people who have a temporary need above their long-term need.
- Accelerated Death Benefit Rider – also known as living benefit riders, this rider allows the policyowner to access a percentage of the face amount prior to death of the insured if he/she is diagnosed with a terminal illness and is given a life expectancy of 12 months or less (some policies may cite 6 months of remaining life expectancy).
- Disability Waiver Of Premium Rider – this rider states that if the insured becomes disabled, premiums will be waived and coverage will continue. The period of coverage, the waiting period needed to qualify, and the definition of disability required for the rider to be activated can vary by company.
- Long-Term Care Rider – this rider allows you to access a portion of the death benefit prior to death to help pay for long-term care expenses. Whatever is left at the time of death is paid to the beneficiary. Qualifying for payments under a long-term care rider is generally similar to qualifying for payments under an individual long-term care policy. Insureds must be unable to perform usually 2 or 3 of the activities of daily living (bathing, dressing, eating, getting in or out of a bed or chair, toilet use, or maintaining continence) or suffer from a severe cognitive impairment. An elimination period may apply as well (usually either 30 or 90 days – varies by carrier).
- Accidental Death Benefit Rider – this rider states that the carrier will pay a higher death benefit than the face amount of the policy if death occurs under accidental means.
- Guaranteed Insurability Option Rider – commonly seen on permanent coverage policies for young insureds, to purchase additional insurance without any new evidence of insurability at certain points in the future or when certain life events happen. Most GIO riders allow the option to increase the face amount every three years – the age when the options start and end vary by company.
- Disability Income Rider – this rider provides both a waiver of premium and a supplemental income if the insured becomes disabled and meets the carriers definition of disability (and any other requirements to activate the rider). In general, the amount of supplemental income provided will be a percentage of the face amount paid on a monthly basis.
Not every carrier will offer every rider on each policy. Give us a call today at 1-800-571-2980 to see what options are available to add to a life insurance policy. We can create a policy structure that will offer you the protection you need at the lowest possible cost.