The 9 Most Useful Life Insurance Riders

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You’ve figured out how much life insurance you need, how many years you need it, how much you can spend and what type of policy best fits your situation.

But your homework isn’t finished yet. Now an array of life insurance policy add-ons, called riders, must be considered.

“Riders can give policyholders additional benefits and increase peace of mind that if something goes wrong, there’s a Plan B,” says Shelley Fiore, an agent for Detroit Financial Group, a general agency of the Massachusetts Mutual Life Insurance Co.

When you buy life insurance, available riders vary by insurance company and policy, as do the rules for how they work. Costs also vary and depend on many factors, including your age, health and type of policy. We can’t list every option available, but here are some of the most useful riders.

In case you become totally disabled

1. Waiver of premium rider

With this rider, you don’t have to pay the premium if you become totally disabled and can’t work.

Fiore says she always suggests that clients consider it so “they don’t have to choose whether to put food on the table or pay the insurance premium.”

Keep in mind the waiver expires, often at age 60 or 65.

2. Disability income rider

You collect a regular income from the insurance company if you become totally disabled and can’t work. The policy specifies the amount of the income and whether it’s paid for a certain amount of time or for the length of the disability.

Some disability income riders pay out only if you became disabled from an accident, while others pay on accident or sickness, says Al Lurty, senior vice president of ING’s U.S. insurance operations.

In case you need more insurance but your health has declined

3. Guaranteed insurability rider

This rider lets you purchase additional life insurance coverage at a later date without undergoing a medical exam or providing any evidence about your insurability.

Because you never know how your health could change, Fiore says it make sense to consider the rider (if you’re eligible) and think you might want to buy more life insurance later. The option allows you to buy additional insurance at certain intervals, such as every three years, or at certain ages, Fiore says. When the option comes up to buy more coverage, the insurance company considers your age for setting the premium, but not your health.

“I’ve seen people with severe heart conditions or cancer get additional coverage who otherwise would have been declined,” Fiore says.

In case you want to convert term life to permanent insurance

4. Term conversion rider

Term life provides coverage for a certain period of time, such as 10, 15, or 20 years. Permanent life insurance, such as whole life or universal life, provides coverage for your entire life, so your beneficiary receives a benefit no matter when you die.

This rider lets you convert term life insurance into permanent life insurance without undergoing a medical exam. Fiore says it’s especially attractive to young people starting careers and families who need life insurance but don’t have enough money yet to secure all the coverage with permanent life insurance, which has higher premiums than term life.

There will be a deadline for when you must convert, if you want to change the term policy to permanent life insurance without providing health information. Understand the convertibility features of term life before you buy.

In case you become seriously ill

5. Accelerated death benefit rider

This has become standard in the insurance industry, Lurty says, and is usually included automatically for free or offered at nominal cost. The rider lets you collect a portion of the policy’s death benefit if you become terminally ill with a short life expectancy, such as one year. The policy spells out how much of the death benefit is available before death. Usually it’s capped at $250,000 to $500,000, Lurty says.

You can use the proceeds for anything, such as paying medical bills or living expenses. Even though the insurer offers the rider free, the company may charge a fee if it is exercised.

6. Critical illness rider

The insurer pays a lump sum if you’re diagnosed with one of the critical illnesses specified in the insurance policy, such as cancer, heart attack, stroke, kidney failure and others. Instead of reimbursing you for medical expenses, the way health insurance does, the rider provides money to use for any purpose during the course of treatment.

In case the unthinkable happens

7. Child protection rider

No one wants to consider the possibility of losing a child, so all emotion must be set aside when considering a child protection rider. Although the death of a child typically would not result in income loss, as would the death of a spouse, the tragedy still would have some financial consequences, which could be an additional hardship for a bereaved family. This term life insurance rider provides coverage for final expenses in case the unthinkable happens. The coverage generally can be purchased in units – for example, $1,000 — Lurty says, at a nominal price. Basic information about the child’s health is required for underwriting.

In case you die from an accident

8. Accidental death benefit rider

If you die from an accident, this rider provides an additional benefit on top of the policy’s regular death benefit. The option is often referred to as double indemnity when the additional payout equals the original death benefit. Sometimes the rider also includes additional payment for dismemberment. You would collect money if you lost a limb or your sight. Life insurers will consider your occupation and hobbies when determining premiums, Lurty says. High-risk activities, like race-car driving, would boost the rates.

In case you outlive your term life policy

9. Return of premium rider

“If you live to the end of the term, in exchange for paying the premium, in most circumstances you get all your money back,” Lurty says. He notes that some companies use a separate rider where others, like ING, write the return of premium benefit into a base policy.

You pay a higher premium for the opportunity to get your money back. The big question to consider: How does paying the extra cost for the return of premium rider compare to investing that money and buying a basic term policy instead?

To find the answer, subtract the annual premium for a basic term policy from the annual cost of a return of premium policy. The difference is how much you would have to invest each year during the insurance term. Then calculate what annual rate of return you’d need on that money to beat the amount you’d get back from a return-of-premium policy. Remember, money from the return of premiums is tax-free, but your own investment returns are taxed. In some cases (depending on age, sex, tax bracket and other factors), you’d need to get more than a 7% rate of return on your investment to beat the return of premium policy, Lurty says.

There is no one-size-fits-all answer to whether any of these riders are right for you. You’ll need to weigh policy options to find the best package for your needs.

“My best advice is to talk to a knowledgeable life insurance agent to help make an informed decision,” Lurty says.

48 thoughts on “The 9 Most Useful Life Insurance Riders”

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  26. Could you please share your opinion on a chronic illness rider that accelerates the death benefit at no additional cost to the insured? The rider would define chronic illness as a permanent condition that prevents the insured from performing a set number of activities of daily living. Thanks.

  27. Great Post. I like your style of writing. I think you should use your awesome writing style to get paid. Me and my husband are using this course http://hopclicks.com/respectmoney to improve our earning from writing articles. You should try this out.Do you work in an industry where your physical health and well-being is of vital importance? If so, you could benefit from taking out a term life insurance policy that features a disability rider.

    A disability rider coupled with a standard cheap term life insurance policy gives you extra coverage in the event that you are disabled or injured in any way that will affect your performance in the workplace. If you work in a factory or outdoors, this type of insurance coverage offers added security. Why face financial ruin in the event of an accident or other circumstances beyond your control when a term insurance policy and disability rider can help you out?

    If you’re not sure exactly what a “rider” is, read on. A rider is basically an extra feature that gives added value and weight to an existing insurance policy. Both a rider and a standard policy must be purchased at the same time. Riders will override the contents of an existing policy so that in the case where the contents of each conflict, the information contained in the rider will take precedence.

    If you want to purchase a rider to add to your existing policy, it will of course cost you more. It may be beneficial to speak to a financial advisor to find out how much extra you should pay for a rider on top of your cheap term life insurance.

    Remember though that you are getting extra coverage so if this is important to you, you should be prepared to pay more. If the worst happens and you are disabled or the victim of a serious accident which impacts upon your physical capability to do your job, your life insurance will pay you a set income after you have been unable to work for a specific period.

    Purchasing a rider does come with some restrictions. You are unable to purchase a rider that offers an amount that is higher than your average income over the last two years. So you cannot make more money each month through your insurance than you did when you were employed.
    The second most important factor to consider is that your disability insurance will only start when other benefits such as those you receive from the state commence. Workers compensation and social security payments may take some time to kick in, so you still need to ensure that you have enough money put aside for a rainy day. Your disability rider will make up the difference after these two payments have been paid of what you would normally make each month as an employed person. This works very well with term life insurance.

    A helpful way of looking at a disability rider is that you can offset the extra cost against peace of mind. If your physical health is crucial in your workplace, you can rest assured that if the worst happens, you will be well taken care of when you have a disability rider and cheap term life insurance.

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  29. “Riders” are modifications to the life insurance policy added at the time the policy is issued that are not found in the original contract. These riders change or adjust the basic policy to provide some feature desired by the policy owner. Depending on the type of life insurance policy you purchase, there are a wide variety of riders that you can buy to enhance your policy’s benefits. Because all riders provide an additional benefit to the policy owner, an extra premium may be charged for them. Let’s look at some of these riders:

    Accidental Death Benefit Rider used to be commonly referred to as “double indemnity,” and pays twice the amount of the policy face value if death results from accidental causes, as if both a full coverage policy and an accidental death policy were in effect on the insured.
    Accelerated Death Benefit Rider permits the insured who is diagnosed as terminally ill, or who requires long-term care or permanent confinement in a nursing home, to collect part of the death benefit from the policy on their life while they are still alive. The rider specifies exactly how much of the death benefit may be available, usually 75%. This can help relieve some of the financial burden caused by an insured’s inability to continue working and the rising cost of health care. Death benefits payable under the policy are reduced by any amounts paid under this rider.
    Disability Income Rider provides a regular monthly income from the insurance company should the insured become totally and permanently disabled. The rider guarantees a specified level of income for either as long as the disability lasts or for a specific time frame outlined at issue.
    Waiver of Premium Rider exempts a disabled insured from making required premiums payments during the term of the disability while keeping the policy in force. This rider usually is in effect until age 60, but waiver of premium may vary from company to company and from policy to policy. Generally, proof of total and permanent disability is required from the United States Social Security Administration.
    Accidental Death Dismemberment (AD&D) Benefit Rider not only pays twice the amount of the policy face value if death results from accidental causes, but also pays additional benefits for dismemberment like if the insured loses sight in both eyes or suffers the loss of any two limbs. Often the benefit schedule pays a smaller amount for the loss of sight in only one eye or the loss of only one limb.
    Spouse & Children Insurance Rider provides additional amounts of life insurance coverage on the insured’s spouse and/or children. These riders usually are limited to a specified face amount by the company.
    Return of Premium Rider (ROP) is available on term life insurance policies, such that at the conclusion of the term of coverage, if the insured is still alive, the policy owner is remitted the sum of all their premium payments.
    Long-Term Care Rider works much like a disability income rider in providing coverage to pay a monthly benefit if the insured comes to require long-term care. This may or may not coincide with an acute debilitation.

  30. George Carlin: “Honesty may be the best policy, but it’s important to remember that apparently, by elimination, dishonesty is the second-best policy.”

  31. The new year is always a good time for your clients to assess financial strategy going forward.

    I often take this opportunity to urge clients to look beyond the basics of their insurance protection plans and ask them to pay close attention to the policy add-ons offered by insurers and whether they have any critical ones in place.

    In the industry, these add-ons are known as riders. Riders can give policyholders additional benefits and increase peace of mind. They know that, if something goes wrong, there’s another option that will help them maximize their insurance protection.

    Riders do vary in price, but there are a few that are always worth the look.

    Waiver of premium: This means the company pays the life insurance premium should the policyholder ever become totally disabled (as described in the rider). If a client overlooks this one, becomes disabled and is no longer able to work, how would he afford his premiums? It just makes sense.
    Guaranteed insurability rider: If the policyholder is eligible for this rider, it makes sense to consider it. The GIR allows the life insurance policy holder to purchase additional coverage on specified election dates without providing evidence of insurability. We never know what life holds for our health many years down the road. If there is a time when your client needs more coverage, make sure he opts into this rider before future health issues preclude him from taking it.
    Term conversion rider: This rider allows policy holders to convert their term life insurance into permanent life insurance without a medical exam. This is attractive for many people, but it can be especially attractive for a young person starting his career and family. A person in this position may need coverage, but not yet have the income to secure permanent insurance. This option allows them to convert when their need for permanent insurance makes sense and without additional underwriting.

    The decision to buy life insurance is an important one. That’s why it’s critical to make sure your clients craft their life insurance protection plans with additional options that will best benefit their families.

  32. You may make this doable by getting a Affordable Cheap Life Insurance by yourself. This really is one particular the ideal implies to protected your family’s financial specifications and permit them to maintain just how of life which they are really used to when you are however alive.Whilst many individuals ought to protected the ideal coverage probable, quite a few of them should take care of financial restrictions.

    For a few of them an inexpensive protection is their only approach to go. Whenever you look-up for Cheap Life Insurance Plan, you should keep in mind the reality that the benefits aren’t sacrificed by this sort of worthy of.Maintaining a short or short-term coverage to produce defense towards your members of the family is a important portion of your monetary technique.With no your spend, the typical of dwelling of your persons you might depart guiding can reduce. In truth, the unpredicted death of the father or mom or spouse is a very harmful decline which can be endured by a friends and family monetarily as well as psychologically.Like a strategy to reduce the amount of money which you buy your rates, you’ll be able to include one rider or two and bring the defense down.

    You’ll be supplied with far more rewards by your rider. You have to know; on the other hand, which not all policies have permitted riders this means you may really need to purchase a further premium for this. Investing in a rider is unquestionably a less expensive preference than gaining much more Cheap Life Insurance policies prepare for the reason that this latter choice will involve wearisome underwriting technique. Here will be the most standard sorts of riders.Incident Rider :This sort of rider would deliver demise benefits which can be identical to the policy’s face price. In the event you die owing to a important incident, your beneficiary will probably be paid out with twin positive aspects by your insurer. It is termed as being a Dual Indemnity Rider.Secured Insurability Rider : This aids you purchase more coverage inside a specified time period without the need of exhibiting insurability. This can be most effective for anyone who is a another person having a partner and kid or if you have a worsening well-being issue.Waiver of Premium Rider : This presents defense to your family if you cannot shell out your own personal premium simply because you might be completely disabled before you achieve a specified age. Your insurer would exempt you from paying the rates until finally you will have the opportunity to complete so.Family Income Advantage Rider : In the event you die, this certain rider will make certain that your family members is supplied earnings monthly. Your contract using this specific rider will recognize just how long your loved ones will acquire like pros.Family Insurance coverage Program Rider- This supplies insurance plan on your lover to ensure in case you and your lover will pass absent, the surviving partner could get demise added benefits.You are going to have the opportunity to obtain an Cheap Life Insurance Plan method whenever you acquire this at an early age. It’s because should you be a young policyholder, you’ll existing very low possibility to your insurer. You’ll be able to profit from the more affordable premium for very quite a long time. You’ll be able to also uncover schemes that may let you take full advantage of the monetary cost savings which you accumulate with the safety prepare with your own existence time.

  33. Many producers are unaware that convertible term policies on seniors age 65 and above represent some of the best prospects for life settlements. Failing to take a look at these policies, before they are allowed to lapse, could be a significant missed opportunity for clients.

    Term insurance is often bought for only a temporary need, and when that need passes, the policy may no longer be wanted or necessary. Also because term insurance premiums ultimately increase with age, many policies become unaffordable over time. A life settlement can benefit consumers by bringing a salvage value for policies that would otherwise terminate without value.

    Here are a couple of examples of how we were able to help clients with term insurance. In one recent situation, a client had a $2.5 million term policy but could only afford to convert $1.25 million. Just before the end of the conversion period, we settled the other $1.25 million, which gave the client enough money to pay for the first few years of premiums on the coverage that he kept.

    Another example was that of an insured who was in poor health and lost most of his wealth in the real estate market, but he desperately wanted to keep as much of his insurance coverage as possible to take care of his family. Upon a review of all of his policies, we found a term contract that was nearing the end of the conversion period that he could not afford to convert. The life settlement proceeds from that policy gave him enough cash to keep his other policies going for several more years, most likely until his death.

    Because a life settlement generally takes several months to complete, to avoid missing a settlement opportunity, the process must begin months in advance. Periodically, you should review your book of term business to uncover those policies that are reaching critical decision points. Who knows? You might even find clients who want to convert and keep their coverage.

    We all want to do right for our clients. So if the decision has been made by one of your senior clients to lapse a term policy, or for that matter, any policy, you owe it to them to take a second look. You never know what you will find.

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  35. 1. Guaranteed Insurability Rider (a.k.a Renewal Provision)
    This rider allows you to purchase additional insurance coverage along with your base policy in the stated period without the need for further medical examination. This rider is most beneficial when there has been a significant change in your life circumstances, such the birth of your child, marriage or an increase in your income. Another advantage is that in case your health state declines with increasing age, you will be able to apply for extra coverage without giving any evidence of insurability. Sometimes this rider may also provide a renewal of your base policy at the end of its term without medical checkups. This rider may end at a certain age. (For related reading, see Life Insurance Clauses Determine Your Coverage.)

    2. Spouse Insurance Rider
    As the name suggests, this rider offers term insurance for your spouse for an additional premium.

    3. Accidental Death or Double Indemnity Rider
    This rider pays out an additional amount of death benefit if the insured dies as a result of an accident. Normally, the additional benefit paid out upon death due to accident is equivalent to the face amount of the original policy, which doubles the benefit. Therefore, upon death due to accidental bodily injury, the insured’s family gets twice the amount of the policy. That’s why this rider is called a double indemnity rider. Just make sure that you understand the restrictions on this rider as many insurance companies limit the meaning of the term “accident”. If you are the sole income provider for your family, this rider is ideal for you because the double benefit will take good care of your surviving family’s expenses in your absence.

    4. Waiver of Premium Rider
    Under this rider, the future premiums are waived off if the insured becomes permanently disabled or loses his or her income as a result of injury or illness prior to a specified age. Disability of the main bread-earner can have the most crippling effect on a family. In these circumstances, this rider exempts the insured from paying the premium due on the base policy until he or she is ready to work again. This rider can be valuable, particularly when the premium on your policy is quite high. Without this rider, you are at risk of lapsing you. Here too, the definition of the term “totally disabled” may vary from one insurer to another, so you need to be aware of the terms and conditions of this rider.

    5. Family Income Benefit Rider
    In case the insured dies, this rider will provide a steady flow of income to family members. When buying this rider, you need to determine the number of years your family is going to receive this income benefit. The merit of having this rider is obvious: In case of death, the surviving family will face fewer financial difficulties thanks to the regular monthly income from the rider.

    6. Accelerated Death Benefit Rider
    An insured person can use the death benefits under this rider if he or she is diagnosed with a terminal illness that will considerably shorten the insured’s lifespan. On the whole, insurers may advance 25-40% of the death benefit of the base policy to the insured. At this juncture, you need to know that insurance companies may subtract the amount you receive, plus interest, from what your beneficiaries may receive on your death. This may eventually reduce the death benefit under the policy. Most often, a small amount of premium or, in some cases, no premium is charged for this rider. Different insurers come out with different versions of the definition of “terminal illnesses”, so better check what the rider has to offer before opting for it.

    7. Child Term Rider
    This rider provides a death benefit in case a child dies before a specified age. After the child attains maturity, the term plan can be converted into permanent insurance with coverage multiplying up to five times the original face amount without the need for medical exams. (To read more about child term rider,
    8. Long-Term Care Rider
    In the event that the insured’s bad health compels him or her to stay at a nursing home or receive home care, this rider offers monthly payments. Although long-term care insurance can be bought individually, insurance companies also offer riders that take care of your long term care costs. (To learn more about this type of insurance,
    9. Return of Premium Rider
    The main aim of this rider is to give back most of the premium that you put into your policy. Under this rider, you have to pay a marginally premium and at the end of the term, your premiums are returned back in full. In the event of death, your beneficiaries will receive the paid premium amount. Insurers sell this rider with many variations so verify, the phrasing of the rider before You buy.

  36. The way I see it; let them smack the nails, sooner or later they will miss smash their thumb, and never hit another nail again .

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  38. Life Insurance with Long Term Care Insurance Riders

    These policies combine life insurance for the elderly with long term care insurance. The basic idea is that if the insured needs money for long term care, they can withdraw money from their death benefit. When the insured passes away, the death benefit is equal to the balance after withdrawing money for long term care.

    There are also products that combine LTC riders with annuities and disability income policies. Annuities are financial products that pay a set amount of money on a regular basis (usually monthly or annually).

    Combining the care with the death benefit in a whole or universal policy may cost more, but there is a payoff either way. If you go into a nursing home, you collect. If you don’t need that care, there’s still cash for your heirs. Plus, whole and universal policies often establish a premium guaranteed to at least maintain the basic benefit, although it may not be enough to build cash value.

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