There are many decisions to make while buying life insurance coverage. What kind of policy you need, how much coverage to buy, and how long coverage needs to last are generally at the top of that list.
Depending on the policy and carrier you choose, though, you may also be able to add additional coverage options, called riders. These riders can help protect your loved ones (and even you!) beyond the policy’s death benefit, and may even be included free-of-charge or at a low cost.
Here’s everything you need to know about life insurance riders and why you may want to add them to your next policy.
Riders allow policyholders to add optional coverage on top of their existing life insurance benefits. This added coverage can offer your beneficiaries an extra payout if you pass away, provide you with the flexibility to change your life insurance policy down the line, or even protect you if you are diagnosed with certain health conditions.
Some riders are included with your life insurance policy at no additional charge. Others may be offered for an additional monthly premium — often just a few extra dollars. The riders available to you will vary from carrier to carrier, and even from one policy type to the next.
Here are some of the most common life insurance riders, and what sort of protections they offer to policyholders.
With the waiver of premium benefit, your life insurance premiums will be waived (but your coverage will continue as scheduled) if you are disabled while your policy is in effect. This is generally limited to those who are permanently and totally disabled; qualifications will vary from one carrier to the next.
If you are diagnosed with a terminal illness, you may be able to access a portion of your policy’s death benefit while you’re still alive, thanks to an accelerated benefits rider. This is typically only available to those with a terminal condition who are given a prognosis of 12-24 months, depending on the carrier. However, benefits may also be available to those with eligible chronic conditions, if the insurer allows.
Any accelerated benefits withdrawn will be deducted from the policy’s overall benefit. This means that if you have a $500,000 life insurance policy and take out $200,000 in accelerated benefits to pay for household expenses, your loved ones will only receive the remaining $300,000 upon your death.
A sudden and unexpected death, such as one resulting from an accident, can be particularly tragic for your loved ones. With an accidental death rider, your beneficiaries will receive a supplemental benefit on top of the policy’s standard death benefit; in some cases, this can be an additional 100% of the face value.
These extra funds can go toward acute expenses as well as things like therapy for your loved ones, to help them cope with the sudden loss.
Term life insurance is a temporary product which offers more affordable coverage for a specific period of time. However, if you find that you need coverage for longer — or even want to switch your policy to a permanent one, such as whole life — a term conversion rider can allow just that.
With term conversion, you can convert a term life policy into a permanent life policy, often receiving a partial credit for premiums paid. There is generally a specific timeframe in which this conversion is allowed and coverage limits may apply.
Riders can allow you to add coverage for your spouse and even your minor children, without needing to buy them their own policy. With a spousal rider, you can purchase term coverage for your significant other for just a few extra dollars a month. This coverage may be limited (and is often much less than your own death benefit) but can be very affordable.
With a child rider, you’re often able to add coverage for all of your minor children with just one premium. Coverage is typically limited to a few thousand dollars, but may be convertible or transferrable if your child wants their own policy in adulthood.
The coverage you bought 10 years ago may not be the coverage you need 10 years from now. With a guaranteed insurability rider, you can add more life insurance coverage to your policy down the line, if you find that a bigger policy is needed.
This insurability often involves specific milestones, such as getting married, having a baby, buying a house, or moving to a new state.
Each carrier offers its own riders, some of which are only available on specific policy types. Other riders might include:
Long-term care (LTC) coverage rider
Return of premium (ROP) rider
Critical illness rider
Disability income rider
Cost of Living Adjustment (COLA) rider
Riders can provide added coverage on top of your policy’s death benefit, often at a very low cost. Be sure to check with your carrier to see which riders are available to you, what they offer, and whether your new policy includes any riders free-of-charge.
Not sure what sort of life insurance coverage options you need? Fiona, in partnership with Leap Life, offers an easy and comprehensive way for applicants to get matched with personalized life insurance quotes from A-rated (or higher) carriers in all 50 states. Agents are also available to help guide you through the process of building and buying your new policy.
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