What is a Life Insurance Rider?

Life Insurance application with rider

Life Insurance Riders are the extra benefits that a policyholder can add on to their policy.

Riders are usually optional. However, some riders are included automatically depending on the insurance company and the type of policy applied for.

These additional features go into force along with your basic policy. Each rider will usually increase your payment, but they are meant to augment the coverage your policy already provides.

Licensed brokers can answer your questions about riders, helping you determine which ones are right for you.

Let’s take a look at a few of the different types of riders. This is not a complete list but we will cover some of the most popular below.

Disclaimer – Rider options vary depending on insurance company

Accidental Death Benefit Rider

An Accidental Death Benefit Rider provides an additional payment if your death occurs as the result of an accident. This rider often doubles the death benefit. This is sometimes referred to as “double indemnity” life insurance.

Accidents can happen to anyone and are hard to predict. You can take the guesswork out by putting just-in-case coverage in place with this rider.

Family Riders

As an add on to your policy, family riders allow for coverage for members of your family like your spouse, children or even grandchildren. For an additional cost, these riders provide a benefit to you if that person passes away.

Spousal Rider

One way to boost coverage on your spouse is to add a spousal rider to your life insurance policy. While you’ll pay more for this option, a spouse rider ensures that you’ll receive a death benefit if they die.

This rider is less expensive than getting a separate policy because it has lower coverage amounts. Ultimately, if you want to protect your family from loss, your spouse should take out his or her own policy.

Child or Grandchild Riders

Losing a child or grandchild is a horrific thought. Add the financial burden of funeral costs on top of the emotional toll can seem like too much to bear.

Child or Grandchild riders are a good way to have peace of mind for a low increase in premiums.

The term of the Child riders usually cover children up to 18 years old. Moreover, some insurance companies allow conversion from a rider to a whole life policy. This option would allow transferring ownership to the child at age 18 as well.

Accelerated Benefit or Living Benefits Riders

Accelerated benefit riders provide a financial safeguard even while alive. These riders use a portion of your death benefit to use for expenses during qualifying circumstances. Also called living benefits, accelerated benefit riders can help if you are living with an illness or health condition.

Accelerated Death Benefit Rider (ADB)

The accelerated death benefit rider provides benefits when you have a terminal illness.

The terminal illness accelerated death benefit rider is generally for individuals with the unfortunate diagnosis of 6 – 12 months to live. Insurance companies will require your doctor to confirm that you are terminally ill to qualify for the benefit.

Accelerated death benefits can cover hospice care, nursing home expenses or hiring a caretaker.

Critical Illness Rider

Critical-illness riders pay to cover treatment for particular illnesses detailed in the policy. The payout is taken from the death benefit and is disbursed as a lump sum as laid out in the terms of the rider.

Common illnesses are –

  • Cancer
  • Heart Attack
  • Stroke
  • Kidney Failure
  • ALS

When the policyholder dies, his or her beneficiary(s) will still receive a death benefit, but it will be reduced by the amount used for the illness.

Waiver of Premium for Disability Rider

What if you become disabled and have to stop working. You still need to pay your premiums to keep your life insurance policy in force.

Also named as a disability income rider, the waiver of premium riders will waive premium payments if you become disabled and can’t work. Like other riders, you’ll need proof of your disability from a doctor to verify your condition.

With the waiver of premium rider in place, nothing will change with your policy.

Final Thoughts

Now that we have a better understanding of riders, you can determine what value they would be for you and your family.

Occupation, family history and current health are all considerations when it comes to riders along with your budget. Availability of riders also depends on the insurance companies offerings and the policy types.

We always recommend a ‘needs assessment’ with one of our brokers to help you. If you would like assistance, please contact us for a no obligation – no pressure appointment.