What is a rider on a life insurance policy?

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  • Riders provide extra benefits, but they are not free. Premiums will increase as they are added to a basic contract.
  • Not every company will offer the same types of riders. You will have to search for the companies that offer the riders you want or need.
  • You may have to qualify health-wise for some riders.
  • Some companies will not allow you to remove riders that have been attached to the original contract. Compare companies, to see which one offers policies with the most flexibility.

Start comparing life insurance rates now by using our FREE tool above! Basic life insurance policies are simply contracts between the insured and the insurance company, that pay a specific amount of death benefit to the beneficiaries, upon the death of the insured. These contracts may leave gaps in coverage for some people. The insurance rider is an additional benefit that the insurance company agrees to add to the basic policy. Each additional benefit carries an extra premium. Adding riders to a basic life insurance policy is a way of customizing the policy to meet your specific needs.

Types of Life Insurance Riders:

  • An Accelerated Death Benefit is a rider, which allows the insured person to take a certain amount of money from the contract while they are still alive. Insurance companies allow this when someone is diagnosed with a terminal illness, usually with less than one year to live. It allows them to pay for special medical care for the remaining months of their life. After death, the balance is paid to the beneficiaries.
  • An Accidental Death Benefit rider will pay an extra amount if the death is accidental. Usually, this will be double the amount of the basic policy
  • The Waiver of Premium rider is when the insurance company will continue to pay your premiums in the event of a disability that prevents you from working so that your coverage does not terminate.
  • A Guaranteed Insurability rider is one that you can attach to a term insurance policy. It guarantees that at the end of the term policy, you will be able to renew for a certain period of time, without proving that you are still insurable. This rider is beneficial if the insured becomes ill or develops a medical condition that would render them uninsurable during the initial term period.
  • A Term Conversion rider allows you to convert a term life policy to a permanent one for a period in future. Many people start out with a cheaper term policy and as their incomes increase and they can afford permanent insurance, they convert their term policy to a whole life or other permanent policy.
  • A Cost of Living Rider allows the insured to increase the amount of the death benefit based on the movement in Consumer Prices over the life of the policy.
  • A Child rider can be added to cover expenses if a child should die unexpectedly. Not all companies offer this option. The child’s medical history may be required. The coverage amount is smaller for a child. However, it would cover funeral costs and provide financial help to the family for time away from work. Some companies allow the child to convert the policy to an individual policy when they reach the age of 25, without having to take a medical exam.
  • A Spousal rider allows a spouse to be added to the policy for a specific amount of time and a specific amount of insurance.
  •  A Long-Term Care rider will pay if the insured needs nursing home care. Only a specific amount of the face amount is allowed.

These are the most common riders added to basic life insurance policies. They just make the policies more flexible to cover things that happen unexpectedly in people’s lives. They allow people to have peace of mind by covering the important holes in their basic policies.

When considering the purchase of a life insurance policy, you should decide which riders are important to you, shop around, and compare the costs of the ones you want. Give thought to the amount of insurance coverage you need and then add on riders, if your budget allows. Most companies will not allow riders to be added after the policy is set up, so plan ahead of time. Start comparing life insurance rates now by entering your zip code in our FREE tool below!

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