Life Insurance Riders: What You Need to Know
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Life insurance riders offer additional coverage by “riding alongside” your policy.
Most insurers allow you to add riders to term and permanent policies.
Some riders are included at no charge to you, while others might raise your rate.
Life insurance is a vital part of any financial plan, but what if a policy doesn’t meet all of your needs?
You can customize your coverage by adding life insurance riders to your base policy.
» MORE: How does life insurance work?
What is a life insurance rider?
Life insurance riders are optional additions to a life insurance policy that provide supplemental coverage or benefits you wouldn’t receive otherwise. They can help you personalize your policy to fit your and your loved ones’ needs.
Some riders increase the cost of your life insurance premium, while others are included at no extra charge.
Types of life insurance riders
The life insurance riders available to you depend on your insurer and the policy you’ve chosen. In most cases, riders can be added to both term and permanent life insurance policies, but the details can vary. You’ll need to opt in to riders when you buy your policy — you generally can’t add them later.
Since riders are designed to help you personalize your policy, you might select life insurance riders that fill financial gaps — like providing funds to assist you in managing a chronic or terminal illness. Other life insurance riders allow you to add extra coverage for a spouse or child, or increase the payout if you die due to an accident.
» MORE: Get life insurance quotes
Accelerated death benefit rider
Typically available on term and permanent life insurance policies.
An accelerated death benefit allows you to access part or all of the policy’s death benefit while you’re still alive if you have a terminal illness. While there are no restrictions on how the money can be used, this rider can be a helpful way to pay for medical care and treatments.
This rider is a type of life insurance living benefit — a policy feature that let you tap into your policy’s payout while you’re living.
This rider only covers specific situations, which can vary by insurer, so be sure to check with your provider. A qualified event could include:
Diagnosis of a terminal illness, confirmed by a doctor.
An organ transplant.
The need for continuous life support or long-term care.
A permanent move to a nursing home.
Many insurers include an accelerated death benefit rider at no additional cost, but may charge a fee for you to access the benefit. Any payouts from this rider will be subtracted from the policy’s total death benefit once you die. So, if you receive 100% of your policy coverage amount from an accelerated death benefit rider payout, your beneficiaries won’t receive a life insurance death benefit. If you have accrued a cash value on your policy, this may also be reduced.
Payments are usually tax-free, but there are exceptions. Payouts from an accelerated death benefit rider could also affect your ability to collect Medicaid or Social Security payments.
» MORE: Is life insurance taxable?
Accidental death rider
Typically available on term and permanent life insurance policies.
An accidental death rider increases the payout to your life insurance beneficiaries if you die from a covered accident, like drowning. It’s sometimes referred to as a “double indemnity” rider, because it can double the amount of money your beneficiaries receive.
However, the death must occur within a set period of time after the accident, such as 90 days, for the extra benefit to pay out. This rider also comes with exclusions and won’t pay out under certain circumstances, such as death from:
Disease.
Mental illness.
Alcohol in combination with drugs or medications.
Rioting.
Suicide.
An accidental death rider typically comes at an extra cost. It can be added to a term or whole life policy without a medical exam up until you reach a certain age, around 65 years old. Payouts from an accidental death rider may decrease after you reach a certain age, usually around 70.
An accidental death rider is not to be confused with an accidental death benefit policy, a different type of stand-alone life insurance policy that pays out only after a death from a covered accident.
Separate from an accidental death rider, accidental death and dismemberment insurance pays out if you die or are injured in an accident.
Child term rider
Typically available on term life insurance policies.
You can add a child term rider to cover your children on your policy instead of purchasing separate policies for them. These riders pay a small death benefit, often from $5,000 to $25,000, if a child dies before reaching the “age of maturity,” typically around 25 years old.
Biological children, stepchildren and legally adopted children can be added without the need for a medical exam. Plus, any children born or adopted after the rider is in place will also be covered.
The rider is tied to the legal guardian’s policy, so if that expires, so does the coverage for the child. You may be able to convert the rider into a permanent policy for your child once they reach the age of maturity, but some restrictions could apply.
Guaranteed insurability rider
Typically available on permanent life insurance policies.
A guaranteed insurability rider will allow you to buy more life insurance coverage in the future without the need for a medical exam or health questionnaire.
Typically, you can increase coverage every three to five years during “option periods” — windows of time when you can purchase additional coverage within a predetermined range. You may also be able to top-up your coverage at the time of major life events, like getting married or having a child. You can typically buy additional coverage until you’re 40 years old.
» MORE: Life insurance medical exams
Long-term care rider
Typically available on permanent life insurance policies.
A long-term care rider allows you to access your life insurance death benefit while you’re still alive if you have a chronic illness and are unable to complete daily living tasks, like bathing, eating or dressing. The money you receive can be used to manage your day-to-day care.
There are generally two types of long-term care riders:
Reimbursement riders will pay you back for what you spend on long-term care expenses, up to your policy’s monthly limit.
Indemnity riders pay out a predetermined monthly benefit, regardless of the actual long-term care expenses you incur.
A long-term care rider differs from a stand-alone, long-term care insurance policy, which does not provide a death benefit to beneficiaries when you die.
Return-of-premium rider
Typically available on term life insurance policies.
A return-of-premium rider refunds some or all of your premium payments if you outlive your term life insurance policy. It can be added to a new or existing term life policy.
A return-of-premium rider comes at a high price — it could more than triple the cost of your premium. And you typically won’t get a refund for any extra policy fees or other add-ons you paid.
Some insurers allow you to use all or half of the refund toward a new policy without needing another medical exam if you want to continue your coverage.
» MORE: Best return-of-premium policies
Waiver of premium rider
Typically available on term and permanent life insurance policies.
A waiver of premium rider pays your life insurance premiums if you become totally disabled and can’t work. Covered disabilities may include permanent illness or a severe injury, such as loss of sight.
You’ll likely need to provide statements from both the Social Security Administration and a physician as proof of your disability, as well as proof to your insurer every few years.
You may have a waiting period before this rider pays out, usually around six months. But if your claim is approved, you’ll be reimbursed for the premiums you paid during the waiting period. Your premium payments will be covered until you’re no longer disabled, or until you reach a certain age, typically from 65 to 70.
Typically, a waiver of premium rider can be added to a policy only at the start of coverage, and you cannot have a pre-existing disability at the time of purchase.
Other life insurance riders
Not all insurance companies offer the same riders, so it’s important to shop around and ask which are available. Here are some additional riders you could come across:
Chronic illness riders let you access part of your death benefit while you’re still alive if you’re diagnosed with a condition that requires extensive medical care and assistance.
Cost-of-living riders gradually increase the policyholder’s coverage to align with inflation and the Consumer Price Index. Premiums will also increase.
Critical illness riders allow policyholders to receive money if they experience a critical illness, like a heart condition or stroke.
Disability income riders provide monthly payments if the policyholder is disabled and can’t work for a specific period of time. Payouts are typically a percentage of the total policy’s coverage amount.
Family income benefit riders provide monthly payments to the beneficiaries if the policyholder dies.
Guaranteed renewability riders give you the option to renew your term policy without taking another medical exam.
Paid-up additions allow you to boost the cash value of a permanent life insurance policy by paying extra premiums early on.
Spousal insurance riders pay out if the policyholder’s spouse dies, but typically don’t offer as much protection as if the spouse had a separate policy. For example, if the policyholder dies or the marriage ends in divorce, then the spouse will lose coverage.
Term conversion riders allow you to convert a term life policy into a permanent one, typically without the need to complete a medical exam.
Term insurance riders offer additional coverage on a whole or universal life insurance policy for a fixed amount of time.
» MORE: Best life insurance companies
Riders for term vs. permanent life insurance
This is the typical availability of the more common riders. Some insurers may not offer these riders at all or may restrict them to one type of policy.
Rider | Term life insurance only | Permanent life insurance only | Term + permanent life insurance |
|---|---|---|---|
Accelerated death benefit rider | X | ||
Accidental death rider | X | ||
Accidental death and dismemberment rider | X | ||
Child rider | X | ||
Chronic illness rider | X | ||
Cost of living adjustment rider | X | ||
Critical illness rider | X | ||
Family income rider | X | ||
Guaranteed insurability rider | X | ||
Guaranteed renewability rider | X | ||
Long-term care rider | X | ||
Paid-up additions rider | X | ||
Return-of-premium rider | X | ||
Spousal rider | X | ||
Term conversion rider | X | ||
Term life insurance rider | X | ||
Waiver of premium rider | X |
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