The Insider’s Guide to
Life Insurance Riders
Life insurance riders provide additional benefits that may appeal to you.
Some riders are free, while others require an additional premium.
The availability of riders depends on the type of life insurance you buy and the state of residence of the policy owner.
If you need to learn about the entire application process before considering your riders, check out our Life Insurance for Dummies guide.
After determining how much life insurance you need and choosing your beneficiaries, the following riders are worth considering.
Accelerated Benefit Rider
If you become terminally or chronically ill, accelerated benefit riders now pay a portion of the policy death benefit while still living.
There is no cost for this rider, but companies have significant differences.
How it works – If you become terminally ill, you may request acceleration of the death benefit. For chronic illness, companies require that you cannot perform 2 of 6 activities of daily living.
(bathing, dressing, toileting, transferring, eating, and continence)
Companies charge a processing fee and will apply an actuarial discount for paying you early.
Each company has its own rules as to how much you can accelerate.
Accidental Death Benefit Rider
Accidental death benefit riders (ADB) provide additional death benefits if you die in an accident.
The way it works – When you buy your life insurance policy, you may have the option to add the accidental death benefit rider. If you die in an accident, your policy pays additional benefits to beneficiaries.
You should only consider ADB when you cannot buy a term life insurance policy.
Examples might include medical conditions that are expensive to insure.
If you are uninsurable, a stand-alone accidental death benefit policy or guaranteed issue coverage is probably your best bet.
Child Rider
Child riders provide life insurance protection for all your children (even future ones) at one low cost.
Instead of buying an overpriced children’s whole life insurance policy (we don’t recommend it), you can get $10,000 per child for a total cost of $60-$100 per year with most companies.
| Child Rider by Company | Ages | Minimum | Maximum |
|---|---|---|---|
| AIG-American General | 0-19 | $5,000 | $25,000 |
| American National | 0-18 | $1,000 | $25,000 |
| Banner Life | 0-18 | $5,000 | $20,000 |
| Lincoln National | 0-18 | $1,000 | $15,000 |
| North American | 0-20 | $5,000 | $25,000 |
| Pacific Life | 0-18 | $1,000 | $20,000 |
| Protective Life | 0-18 | $1,000 | $25,000 |
| Principal | 0-18 | $5,000 | $25,000 |
| Prudential | 0-18 | $10,000 | $100,000 |
| Symetra | 0-17 | $1,000 | $10,000 |
| United of Omaha | 0-20 | $5,000 | $10,000 |
Conversion Extension Rider
Most term life policies offer conversion to universal life insurance.
Some companies offer conversion privileges that match the term length.
Other companies provide a shorter conversion privilege but allow you to purchase the conversion extension rider for an additional cost.
Disability Income Rider
A disability income rider provides you with a monthly income in the event you become disabled.
Most companies require a six-month disability period before benefits start.
The disability benefit depends on the size of the policy you bought.
Long Term Care Riders
Some companies offer riders that provide long-term care insurance benefits for seniors and others with serious illnesses.
Life insurance statistics have repeatedly shown tremendous interest in this type of rider.
If you’re concerned about having chronic illnesses or have a family history of chronic illnesses, LTC riders may be a good choice.
While some term policies offer LTC riders, the most comprehensive LTC riders are found with universal life or whole life insurance policies.
LTC riders require additional underwriting, checks of the MIB, obtaining medical records, and reviews of your height and weight.
Term Insurance Rider
Term life insurance riders allow you to customize your policy with multiple term lengths.
In the past, if you wanted a 40-year term life insurance policy and a 20-year term, you would need to buy two policies.
Now you can buy one policy with multiple term lengths.
It will save you a few bucks over having two policies, but it’s also more convenient than tracking multiple policies.
We now have a company that offers a spouse term rider and even has a term life insurance that builds cash value.
It’s a good option when getting life insurance for a divorce, as the riders can match coverage requirements.
It’s a good way to reduce costs if you smoke cigarettes, cigars, chew tobacco, or other tobacco products.
If buying for business purposes, such as for collateral for SBA life insurance, you can set up the riders to match the loan duration.
Some companies offer a spouse term life insurance rider. Depending on the amount of the rider, your spouse may be able to skip the paramed exam.
Waiver of Premium Rider
If you become disabled, the waiver of premium rider will waive premiums during the disability.
This rider has an additional cost, and benefits typically start after a six-month waiting period.
You can even convert your term policy to permanent life insurance, and the premiums will still be waived.
Overloan Protection Rider
Overloan protection riders prevent policies with outstanding loans from lapsing.
Cash-value life insurance policies use policy loans to provide supplemental retirement income.
If a policy lapses while loans are outstanding, there is the potential for those loans to be treated as taxable income.
An overloan protection rider prevents the policy from lapsing due to the loans.
Return of Premium Rider
A return of premium rider (ROP) refunds the premiums you paid at the end of the level term period.
With some policies, companies provide exit opportunities throughout the life of the policy, where you agree to cancel the policy in exchange for a refund of premiums.
This rider may appeal to businesses when purchasing key person life insurance.
Final Words
Life insurance riders provide many additional benefits but make sure you need the rider before paying extra.
Get a quote today. You can get 500k life insurance – no medical exam needed!
We’ll contact you and let you know what riders are available for your policy.
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