Life Insurance Riders
What are they?
Riders are add-ons for life insurance policies that allow you to customize your insurance to your individuals needs. Some increase your premium and others are built-in without additional charge. Learn more about some of the most common riders below.
Common Insurance Riders
Below are nine common life insurance riders that can be added to your policy. This is not an exhaustive list as there are many more options available if you do not see a rider that piques your interest.
Accidental Death & Dismemberment
AD&D provides an additional death benefit amount to your policy in the event of purely accidental death or dismembering of a digit.
Waiver of
Premium
Pays the premium of the policy when you are totally disabled. There is typically an elimination period of 3-6 months to qualify.
Lifetime
Income Benefit
Provides the potential for guaranteed income for life. Only certain policies have this option. Income is deducted from the cash value of the policy.
Child Term
Provides term coverage on all children until a certain age. Can be converted to a permanent policy when the term expires. Adopted or children born after the fact are also covered.
Unemployment
Provides a waiver of premium for a specified amount of time in the event you are unemployed from a full-time job. Typically there is an elimination period to qualify.
Other Insured
(Spouse)
Provides term insurance on another person such as domestic partners or spouses. Typically has minimum coverage amounts. Incurs additional premium.
Guaranteed
Insurability
Allows you to increase your coverage amount down the road without having to provide insurability. Typically has a maximum amount you can increase. This increases your premium payments.
Return of
Premium
If you outlive your term policy, you receive 100% of your premiums paid over the course of the policy tax-free. This has a higher monthly cost compared to non-return of premium policies.
Disability
Income
This provides a monthly benefit if you are unable to perform your job duties. Typically has a waiting period before benefits start and a limited pay-out period such as 2 or 5 years.
Accelerated Benefits Riders (ABRs)
So, you’ve never heard of accelerated benefits? We call them “living benefits” since you can use them while you are still living!
Imagine you are diagnosed with stage 2 lung cancer. Have you thought about how that might affect you and your family? Take a minute to really think about how your life would change if that happened to you or your spouse. Unfortunately, just because you got sick and can’t work doesn’t mean you can skip the energy bill or your mortgage, those companies still want their money. What if I told you there was a type of life insurance with benefits that pays you money in the event you become sick? Well, you’re in luck because that exists! Read below for a quick explanation of the different ABRs.
Terminal Illness
If you have been diagnosed with a terminal illness that will result in death by a doctor in 12-24 months, you can accelerate a portion of your death benefit while you are still alive.
Critical Illness
If you suffer a critical illness such as heart attack, stroke, or cancer you can accelerate a portion of your death benefit while you are still alive to be used for whatever you need.
Chronic Illness
If you are chronically ill, meaning you cannot perform 2 or more of the 6 activities of daily living you can accelerate a portion of your death benefit while you are still alive.
If your insurance company approves your claim, they will respond with an offer they deem is reasonable based on a multitude of factors. This is predominately based on how much your life expectancy is expected to change due to cancer or illness. A general rule of thumb is that the shorter you are expected to live, the higher the compensation from the carrier. Once you insurance approves your claim and has responded with an amount they are willing to pay, you have a few options:
- Accept the offer – your policy is now complete. The insurance company “accelerated” your policy and it is now contractually complete. You have no life insurance with this policy anymore. But you now have a lump sum of tax-free cash to use however you would like!
- Decline the offer – if you select this option, nothing happens to your policy. You receive no money from the insurance company and your policy stays in effect as if nothing ever happened.
- Accept a percentage of the offer – if you select this option, you receive a percentage of money from the amount offered by the insurance company. Your face amount will be reduced either by the percentage received or by the amount you received, this depends on your individual contract. Not all life insurance companies offer this choice.
Life Insurance Rider Form
Add as many or as few riders as you would like to receive a custom quote.
Ready to Customize your Policy?
It’s just like adding toppings to your favorite burger! Alternatively, if you don’t see anything that interests you, feel free to reach out with your specific request and we will see what we can do.