What Is A Life Insurance Rider?

It’s important to be prepared for the medical, funeral and other expenses that arise at the end of one’s life. That’s where life insurance comes in, offering security to you and your family in the form of a death benefit payout to ease the burden of any final expenses and debts. When shopping for life insurance, you can choose a policy based on cost, coverage amount and benefits. Life insurance policies are customizable, but only to a certain extent.

What Is an Insurance Rider?

A life insurance rider supplements your existing life insurance policy by providing additional coverage for specific scenarios. Life insurance riders vary by insurance company, but here are some of the most common types of riders.

Term Rider

You don’t need to have term life insurance to add a term rider to your policy. A term rider can be added to a whole life insurance policy to provide extra coverage for a predetermined length of time. You’ll get additional protection during the limited time you need it, and once the term rider expires, you’ll still have your whole life insurance policy’s coverage.

Accelerated Death Rider

If you’ve been diagnosed with a critical illness, an accelerated death benefit rider, also known as a living benefit rider, allows you to access a portion of your death benefit funds before you die. You can then use the money toward medical bills, medication costs and other healthcare expenses. The advantage of having this rider is that your loved ones will still be able to use your death benefit payment toward other end-of-life expenses without all of it going toward treatment costs.

Your policy will define what types of illnesses qualify, but terminally ill individuals will typically be eligible if their life expectancy is less than two years. Those with a chronic illness or who require long-term care may also be eligible, depending on the insurance provider.

Some life insurance policies automatically include this benefit, while others may charge extra. Consult with your insurance provider for details on your policy.

Accidental Death Rider

This type of life insurance rider guarantees a payout to your family if you die in an unexpected accident. If you have a dangerous job or lifestyle, an accidental death rider may be an especially good fit for you. Accidents can happen to anyone, however.

It’s important to read your policy’s terms for more details, as accidental death riders often expire once the insured person reaches a certain age, and deaths resulting from certain things like war or a hazardous hobby may not be included.

Waiver of Premium Rider

Should you become disabled or seriously injured, a waiver of premium rider allows you to stop paying life insurance premiums. You’ll still have life insurance coverage, but you won’t need to continue making payments. This type of life insurance rider often has a maximum age of 65, so if you become disabled once you pass this age, the rider will no longer be in effect and your premium will not be waived. You may not qualify if you have a pre-existing condition or if your disability doesn’t meet the requirements of your insurance company.

Guaranteed Insurability Rider

If you decide you need more life insurance coverage in the future — for example, if your financial situation changes, you get a new diagnosis or you buy a house — a guaranteed insurability rider lets you increase your coverage without going through the underwriting process a second time. This prevents you from getting denied coverage due to changes in your health and age or having your premiums go up.

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