How Do Life Insurance Riders Work?
Life insurance riders allow you to add features to your policy for more comprehensive coverage. Riders come at an additional cost but can offer some additional benefits that can be used during the life of the policy. Here are some important riders to consider.
Child Rider – This will cover all children in your household ages 15 days to 18 years old and any born after the rider is purchased. Most companies offer coverage up to $25,000 for each child. Once your child hits a specific age, usually 25, they will no longer be covered by the rider but can convert it to their own coverage without proof of insurability. A child rider is a cost effective way to protect your children if you feel the need to do so.
Waiver of Premium Rider – This rider will pay your premium in the event that you become disabled and are unable to work. It usually will usually pay premiums until you are no longer disabled or up to age 60 or 65 depending on the company.
Critical Illness Rider – This rider will allow you to access your death benefit early should you suffer a critical illness such as a stroke, heart attack or cancer. This can give you access to funds that can be used for treatment or living expenses.
Long Term Care Rider – This rider will allow you early access to your death benefit for qualified long term care expenses. Most companies require that you must be unable to perform at least 2 out of the 6 activities of daily living – dressing, eating, bathing, continence, toileting and transferring. You can also qualify for this rider if you become cognitively impaired due to issues such as dementia or Alzheimer’s.
Chronic Illness Rider – Like the long term care rider, you must be unable to perform at least 2 out of the 6 activities or cognitively impaired in order to access your death benefit early. Unlike the long term care rider, your critical illness must be considered permanent in most cases and care might be limited to a nursing home.
Terminal Illness Rider – This rider is included in most policies at no cost. It allows you to access a certain percentage of your death benefit early if you have been diagnosed with a terminal illness with a life expectancy of 12 months or less.
Disability Income Rider – This rider allows you to accelerate your death benefit in the form of monthly income in the event you become disabled. The life insurance company will specify its definition of disability in the policy. You can specify terms such as elimination period, monthly income amounts and benefit period.
Guaranteed Insurability Rider – There are times in your life when you might need additional life insurance coverage like buying a bigger home or adding a child to the family. The guaranteed insurability rider allows you the option to buy more insurance at specific periods set by the insurance company. You will not have to go through any additional underwriting but your premiums will be based on your age when adding coverage.
Accidental Death Benefit – This rider will provide a multiple of the face value of your base policy if your death is accidental. The insurance company will have its own definition of what it considers ‘accidental’, so it is best to review the rider guidelines before adding it to your policy.
These are some of the more common riders that are available on term and permanent products. If you have any questions about specific riders, please give us a call at 877-205-4172.