When constructing a life insurance policy, you’ll be expected to make several key decisions about your coverage. How much coverage (i.e., death benefit amount) you need and how long you want that coverage to last are the two biggest questions you’ll address. You will also have to decide, however, whether or not you want to add any available riders to your policy.
Why You Should Consider Adding Life Insurance Riders
Riders are policy add-ons that provide you and your beneficiaries with extra coverage for certain scenarios, on top of your life insurance policy’s basic death benefit.
With riders, you may be able to provide your loved ones with an added benefit, depending on the cause of your death. Certain riders might grant you access to your policy’s benefit while you’re still alive, while others make it easier to adjust your policy terms in the future, if necessary.
Some riders may be included with your coverage automatically and are available at no extra cost. Others will need to be added to your policy manually and can increase your monthly premium. Even if they come at an added expense, life insurance policy riders are relatively affordable in most cases, and might only add a few dollars to your annual insurance cost.
8 Riders You May Want to Add to Your Policy
Each carrier offers their own rider options to choose from. Often, riders vary depending on the type of policy you choose.
Here are eight of the most popular — and arguably, most beneficial — riders that may be offered to you when buying a policy, and why they are worth considering.
Spousal Rider: With a spousal rider, you can add additional coverage for your spouse onto your new life insurance policy. This coverage is usually temporary in nature (term life) and may be limited to a specific dollar amount (often much lower than your policy’s death benefit). While a spousal rider generally won’t replace your significant other’s own policy, it can provide additional coverage at a low monthly cost.
Child Rider: With a child rider, you can lock in coverage for your minor child(ren), as young as a few weeks old. The death benefit, which is often in the neighborhood of $10,000 to $20,000 per child (and often covers all minor children with just one low premium cost), can help cover final expenses and medical bills if any of your children were to pass away.
One of the biggest benefits to buying a child rider is future insurability. Many insurers will allow your child to convert their minor child coverage into a separate, personal policy once they reach adulthood — even if they develop certain medical conditions that would normally make buying a policy difficult.
Accelerated Death Benefit (ADB): With an accelerated death benefit (ADB) rider, you can access your life insurance policy’s benefit before you pass away, whenever necessary. This rider is generally available to insured persons who are diagnosed with a terminal illness, such as cancer.
With this rider, you can withdraw a portion of your policy’s total benefit, which can be used for medical bills, household expenses, or to simply enjoy the time you have left with your loved ones. Whatever is withdrawn from the policy with this rider will be subtracted from your beneficiary’s death benefit when you do pass away. ADB riders will sometimes cover chronic illnesses, as well.
Waiver of Premium: If you are diagnosed with a qualifying disability, the waiver of premium rider will allow you to keep your life insurance coverage intact through the end of the original term, while also waiving your monthly premiums. Depending on your policy’s terms, your disability may need to be total and permanent in order to qualify. There also may be a waiting period before your premium waiver kicks in.
Accidental Death: While the death of a loved one is always tragic, a sudden and unexpected death (e.g., a car accident or fall) may bring additional heartache and financial challenges. With an accidental death rider, your beneficiaries will receive an additional benefit on top of your policy’s normal payout. These extra funds can cover unexpected medical expenses or pay for therapy for your loved ones.
Term Conversion: The best-case scenario with life insurance is that you outlive your coverage. However, you may reach the end of your term insurance and realize that you want your coverage to continue. With a term conversion rider, you have the option to convert your term life policy into a whole life policy. Often, a medical exam won’t even be required. Depending on your age and health status, term conversion may enable you to buy permanent coverage when you otherwise wouldn’t be able to.
Long-Term Care (LTC) Rider: According to the CDC, one in every four Americans will have a disability that affects their major life activities. As you get older, your chances of developing a disability — either due to a medical condition, illness, or accident — increases. If you need long-term care, your health insurance coverage may not be enough to cover your expenses. However, many life insurance policies offer long-term care (LTC) coverage as a rider, giving you early access to a portion of your life insurance death benefit, which can be used to cover facility care, in-home services, aides, and more.
Return of Premium: Outliving your life insurance policy is a fantastic thing, but it does mean that you’ve paid premiums for years without actually needing the coverage. With a return of premium rider, you will receive your premiums back after your life insurance policy ends, if you live longer than your coverage term. Essentially, you get the best of both worlds: coverage if your loved ones need it, or your money back if you don’t.
Life insurance is a wise investment, especially for those with families and health issues to consider. On top of your normal death benefit, certain riders can be used to make your life insurance coverage even more beneficial for you and your loved ones, even while you’re still living.
Consider the riders available to you when purchasing a life insurance policy, and how much benefit (or just simple peace of mind) they will provide.
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