Life Insurance Riders: What Are They and Why Are They Important?
Simply put, riders are additional benefits added to a life insurance policy to provide numerous forms of added protection within one policy. In many cases, riders are either free or relatively inexpensive because there isn’t any additional underwriter required for these riders. Furthermore, many consumers are unaware of riders because they are rarely highlighted by life insurance agents—full disclosure I often forget to mention them with everyone as well.
Though none of us are perfect, hopefully I can give you a good idea of how important these riders are. As with everything, whether you’re paying for additional riders on your policy(s) or not, product placement and design should be relative to your personal situation and needs.
1. Guaranteed Insurability Rider (a.k.a) Convertibility Options
This rider gives you the ability to increase your coverage and/or change products without a medical exam. Life is ever-changing, so your coverage needs may change as your progress through life.
- Having children
- Getting married
- Becoming a homeowner
- Taking on debt
- Starting a business
You name it, life happens, thus, your coverage needs will change. Something to keep in mind is that this rider may end at a certain age—usually 70—and will become ineffective. If you choose the correct life insurance company, you likely won’t have to pay additional fees or premium to have the rider—it’ll be free.
2. Accelerated Death Benefit Rider
This is generally a free rider that I recommend everyone have attached to their policy(s). This rider allows you to access a percentage of your death benefit to use while you’re alive if you are diagnosed with a terminal illness that can shorten your life.
Percentages usually range between 25-50% of your death benefit, meaning if you had a $1,000,000 life insurance policy and were diagnosed with a terminal illness, you could access $250,000-500,000 to cover medical expenses and/or fulfill any last wishes.
Dark as it may seem, this rider can put the dying person at ease knowing that expenses and/or experiences are being fulfilled while they are still alive. Again, this is almost always a free rider—so there is no excuse for an agent to not add it to your policy. If you have any wonder as to if the rider is added to your policy or not, make sure that it is. Regardless of whether you buy a policy with us or not, please make sure that your agent adds this to your policy.
3. Child-Term Rider
This rider provides temporary life insurance coverage for a child under the age of 18 in the event of their untimely death. This rider is generally very inexpensive due to children under 18 having a high likelihood of living past their allotted term of coverage and death benefits are usually between $25,000-50,000.
4. Long-Term Care Rider
This rider provides monthly payments to the insured if placed in a nursing home or receiving home care. Individual long-term care insurance certainly exists, but you can also get it as a rider on your life insurance.
5. Waiver of Premium Rider
This rider states that future premiums won’t be due, in the event the insured becomes permanently disabled. Specifically for the breadwinner of the family, this rider is very important. Not only would a permanent disability ruin a family from a day-to-day standpoint, but it could result in the depletion or loss of all valuable assets to the family. In most cases, we only recommend adding a waiver of premium rider to the policy(s) when premiums are high—in any other situation, it’s unnecessary, respectively.
Riders can provide additional levels of protection that are valuable to insured individuals. No matter who you’re getting your protection from, make sure you ask about riders and the cost it adds to your premium. Think of riders as the tinting of the windows or sound system you add to the car you purchase. However, instead of paying thousands for the windows or sound system, you can add these riders for little-to-no additional money. All you’ve got to do is ask!