What is a Life Insurance Rider?

A rider is simply a separate add-on document that has special provisions not included in the main policy it is attached to. Generally you can request to purchase a rider for extra coverage or protection not originally covered in the main policy. However, depending on the type of insurance policy you are applying for, which riders, if any are offered. Some riders may even be included at no extra charge depending on the type and the insurance company. 

There are many types of Life Insurance riders. Just to name a few common examples with their definitions, I made a short list below :

·         Accidental Death Rider: When added to a life insurance policy, this rider provides an additional amount of money to be paid to the beneficiary if the policyholder dies as a result of an accident. Since in most cases this life insurance rider usually doubles the amount of the death benefit, it is often referred to as a Double Indemnity Rider.

·         Accidental Death, Disability or Dismemberment Rider:  The accidental death rider can be sometimes extended to include any permanent or long term disability lasting at least for 6 months or loss of limbs or sight due to accident.

·          Child Term Rider: The Child Term Rider protects your children with a small benefit, typically from $1,000 to $10,000, until they reach the age of 18 in most cases. This rider alleviates the need to complete an entire application on behalf of your children and instead covers all of children under a certain age for one low fee. Children covered under the Child Term Rider do not have individual life insurance policies but are offered the chance to convert the term rider benefit into their own plan, in most cases at age 18.

·         Critical Illness Rider: Also known as an Accelerated Death Benefit Rider. This life insurance rider allows an insured to collect either all or a portion of their life insurance policy while they are alive. The insured can claim this rider if he/she is diagnosed with a terminal illness, requires long term care or admission to a nursing home, by withdrawing part or whole amount of death benefit from the basic insurance policy. The basic insurance policy reduces by the amount withdrawn under rider. The rider helps the insured and his family meet immediate financial needs of medical treatment and loss of regular income generated by the insured. The rider generally specifies the amount available to insured in such cases and can be withdrawn by him/her during term of policy. This type rider has become standard in the industry and is usually included automatically for free or offered at a nominal cost.

·         Disability Income RiderBy adding the Disability Income rider to your life insurance policy, you will receive a portion of your death benefit in monthly installments if you become disabled. Each insurance company has different specifications regarding the percentage of your death benefit that will be paid to you, when payments will commence, and the length of time that payments will continue.

·         Family Income Benefit Rider: This rider provides a cushion in case of sudden death of the insured during policy term. While taking the rider, the insured needs to select the time frame for which he wants his family to continue receiving benefits. According to their comfort  level, the beneficiaries will have the option of receiving regular monthly income or taking the entire benefit as lump sum after the death of the policy taker. As the insured grows old the duration of rider decreases. This rider is most beneficial to families with a single bread winner, since it provides a continuous monthly payment to the insured's beneficiaries in the event of the insured's death.

·         Guaranteed Insurability Rider: Also known as Renewal provision, this rider allows you to buy extra insurance at certain periods during the specified term of rider. Without letting your existing policy elapse, you can purchase additional insurance or convert basic term insurance without proving insurability or having to undergo fresh medical examination. The rider is most beneficial to those who may experience major medical illnesses or loss of health due to advancing age, as there is no need for fresh underwriting. It also allows to add more insurance with changing life circumstances like marriage or arrival of newborn.

·         Level Term Rider: With this rider you can attach a fixed amount of term insurance to your basic permanent life insurance policy for a certain period. The amount of benefit assured can be multiple times the basic death benefit from the original policy.

·         Return of Premium Rider: Return of Premium is a relatively new feature available since the early 1990's in some Term Life Insurance policies as a solution to the live and lose concern presented by traditional term policies. As the name implies, this rider will allow term life insurance policyholders to recover all or part of their premiums paid over the life of the policy if they do not die during the stated term. Also keep in mind that money from Return of Premium is tax free! Although, adding this type protection will raise the overall cost of the policy accordingly. Return of Premium (ROP) is not available with all term policies.

·         Waiver of Premium Rider: This rider helps the insured to continue with his/her insurance policy even if he/she are unable to pay regular premiums due to long term or permanent disability (generally before a specific age). By default, a life insurance policy can expire if the premium is not regularly paid. If the insured suffers from a disability that prevents him from earning a regular source of income, the insurance policy premiums may become difficult to bear. This rider allows the insured to take waiver from premium payments while the disability lasts or for the entire policy period in case of permanent disability. So in other words, the waiver of premium life insurance rider will guarantee the active status of the life insurance policy even if premiums are not being paid by the policy owner due to a proven disability that prevents him from earning a regular source of income. The terms of proving disability and its valid duration vary from company to company and across different policies.

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Note: Life Insurance information can be confusing to many people. As an "independent licensed agent" I can explain things to you in simple terms so you feel comfortable making a decision. Then I can help you choose a life insurance policy, from many choices of different insurance companies, that you feel fits your needs. Plus if you choose to work with me you will have personalized service by a local agent that can shop premium quotes for you. If you would like my assistance to discuss and/or start the process of getting you insured please call me at 941-404-5334. 

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