9 Common Life Insurance Riders You Should Know About
Written by
Laura Gariepy
Edited by
Molly Sullivan
Commitment to Our Readers
GOBankingRates' editorial team is committed to bringing you unbiased reviews and information. We use data-driven methodologies to evaluate financial products and services - our reviews and ratings are not influenced by advertisers. You can read more about our editorial guidelines and our products and services review methodology.
20 Years
Helping You Live Richer
Reviewed
by Experts
Trusted by
Millions of Readers
You know that life insurance pays your beneficiaries a death benefit when you die. You may also know that some life insurance policies build cash value you can borrow from if needed.
But life insurance can actually do so much more for you and your heirs, depending on how you structure your policy. You can customize your life insurance with riders, which are policy clauses that provide additional protection and benefits (usually at an additional cost).
We’ll share nine common life insurance riders you may see while shopping for a policy. That way, you can build the ideal solution for you and your loved ones.
1. Accidental Death
An accidental death rider provides an additional death benefit to your beneficiary (often doubling the amount received) if you die in an accident. You may also receive a percentage of your death benefit while you’re alive if you sustain certain types of injuries in an accident.
2. Accelerated Death Benefit
An accelerated death benefit rider pays out part of your death benefit before you die if you’re diagnosed with a terminal illness and are expected to die within a certain timeframe. Some policies also offer chronic and critical illness riders, allowing you to access part of your death benefit in advance if you receive a qualifying diagnosis.
You can use the funds to cover your medical care, household bills and other expenses. It’s important to note that any money received through these living benefits will reduce the payout your heirs receive when you die.
3. Disability
The disability rider allows you to access a portion of your death benefit in advance if you become disabled before a certain age and are unable to work. Funds received can help you make ends meet, but your heirs will receive less when you die.
4. Long-Term Care
The long-term care rider converts your death benefit into monthly payments if you’re admitted into a long-term care facility, such as a nursing home. These funds can help you cover the cost of treatment, preserving your savings and other assets. However, like the other riders we discussed, your heir’s payout will get reduced by the amount you received before you die.
5. Child Term
A child term rider provides your child(ren) with term life insurance coverage. Once they become an adult, they can convert the policy into permanent coverage without going through a medical exam. Some insurers also offer spouse term riders, allowing you to obtain coverage for your spouse.
6. Family Income Benefit
The family income benefit rider provides monthly payments to your loved ones for a predetermined amount of time after you die. At the end of that period, they’ll receive the full death benefit in a lump sum.
7. Guaranteed Insurability
The guaranteed insurability rider permits you to purchase additional coverage at specified intervals or due to certain life events without having to prove you’re still insurable. That means you can increase your death benefit even if your health has worsened since you took out the policy.
8. Waiver of Premium
A waiver of premium rider shifts the responsibility of paying your policy’s premium from you to the insurer if you become disabled and unable to work, keeping your policy in force. Generally, this rider has age limitations, and if you recover and start working again, you’ll have to resume making payments.
9. Return Oof Premium
The return of premium (ROP) rider gives you back all the money you paid in premiums if you outlive your policy. While this rider can significantly increase your insurance costs, some people see it as a forced savings account.
Important Considerations
Think about these things before making final decisions.
Consider Your Family’s Needs
Not all riders may be appropriate for all policyholders. You should consider your circumstances and budget and chat with your life insurance agent to make an informed decision about how to structure your policy.
For example, Chuck Czajka, licensed life insurance agent and founder of Macro Money Concepts, doesn’t generally suggest child and spouse term riders to his clients. He thinks it makes more sense for them to have their own, separate policies.
Do the Math
Some riders are pricey and may not be worth the added expense.
For instance, “if someone is looking at a return of premium rider, they should run the numbers with their agent for both the ROP and the normal option. Often, you can get a better return on the money outside your life insurance policy, and it won’t necessarily make sense to use a return of premium rider. Consumers should look at both options and make an informed choice,” said Matthew Gratt, licensed life insurance agent and founder of CoverSavvy.
Read the Fine Print
The information in this article is generalized, and every insurer has different rules on qualifying for and accessing a rider’s benefit if needed. Carefully review the information for each rider and ask any questions you may have before adding them to your policy.
More From GOBankingRates
