Updated June 4, 2021|9 min read
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Riders offer supplemental coverage to your life insurance policy and accommodate unexpected events that aren’t built into your policy. Some common types of life insurance riders – like the term conversion rider, which allows you to convert your policy into a permanent one at the end of the term – are included for free. But other types – such as the waiver of premium rider, which pays out in cases of disability – cost extra and can be hard to qualify for.
Whether or not you should add a rider to your policy depends on the type of life insurance rider you’re getting, what additional coverage you need, and how much more you can afford to pay on your policy’s premium. Oftentimes, a standalone insurance policy (such as disability insurance) is going to offer more coverage than a rider will. But some add-ons (such as a child rider) might be worth the additional cost, depending on your needs.
When you’re purchasing your life insurance policy, your agent or broker can help you determine what customizations you need.
Accelerated death benefit riders pay out your policy’s death benefit while you are still alive if you become terminally ill
Accidental death and dismemberment (AD&D) riders cover people with risky jobs or hobbies who have a higher chance of dying or losing a limb in an accident
Benefit structure riders give you some flexibility to adjust your life insurance policy that you otherwise wouldn’t have, such as converting your policy
Accelerated death benefit insurance riders provide you with financial protection while you’re still alive. These provisions take money from your life insurance death benefit to help you with expenses during qualifying, unexpected circumstances.
Also called a living benefits rider, accelerated death benefit riders help people who are living with an illness and are unable to take care of themselves. There are several types:
An accelerated death benefit rider (ADB) pays out benefits when you have a terminal illness. Most life insurance companies include ADB in your policy at no additional charge. The terminal illness accelerated death benefit insurance rider is specifically tailored toward illnesses where you don’t have much time left — you'll need a doctor's diagnosis to confirm that you’re terminally ill and have 6 to 12 months to live in order to be eligible for a payout.
Accelerated death benefit insurance riders cover end-of-life care such as hospice care, living in a nursing home or hiring a private caretaker. But the funds don’t have to be used for care. Some insurers even suggest that you use the living benefit to pay for a vacation or anything that can make your final days as easy and enjoyable as possible. Because you’re tapping into the death benefit while still alive, ADB riders are often called “living benefits” and are paid out as needed instead of in a lump sum. The amount you receive can vary, but it can be as high as 80% of the death benefit.
While the payout is probably not taxable, you should check with a tax law expert to confirm, as it may vary in your state.
Critical illness insurance riders pay out accelerated benefits while you’re alive to cover treatment for certain illnesses specified by the policy, which could include a heart attack, life-threatening cancer, stroke, kidney failure, ALS, and other critical conditions that could limit your life expectancy and leave you with unaffordable medical bills. The terms of your policy will specify if a particular illness is covered.
The money for the payout is taken out of the death benefit and is disbursed as a lump sum. If you die, your beneficiaries will receive whatever is left of the death benefit.
Some insurance companies offer a chronic illness rider, which will begin paying out accelerated benefits while you’re still alive if you are no longer able to perform at least two of the six Activities for Daily Living (ADL) — eating, bathing, getting dressed, toileting, transferring, and continence. A medical professional must certify that the disability is permanent.
You can add long-term care insurance to your life insurance policy to create a hybrid long-term care policy. Like the chronic illness rider, the long-term care insurance rider activates your benefits when you can no longer perform two of the six activities for daily living, though the LTC rider pays explicitly for long-term care expenses.
Adding LTC often comes at a high additional cost, but may offer residual benefits above the value of your original policy — meaning that if your long-term care expenses end up being more than the value of your original death benefit, the policy will keep paying for your care until you die.
Also called a disability income rider, a waiver of premium insurance rider waives your life insurance policy’s premium payments if you incur a serious disability and can no longer work. Each life insurance company has its own definition of a disability, which can make it difficult to qualify.
Disability insurance, which goes beyond a simple waiver of premiums rider, is a better option for more robust protection. With disability insurance, you’ll receive a payment in the form of a disability benefit that will replace the income you lost while disabled.
Family insurance riders offer additional coverage for members of your family, like your children or your spouse. You pay extra to have the rider pay out the death benefit to you if the person named in the rider dies.
If your spouse also contributes to the household income, you need to figure that into your coverage. Even if your spouse doesn’t earn an income or isn’t the primary breadwinner but takes care of the kids, adding a spousal insurance rider accounts for the extra childcare costs you’d incur if they were no longer here.
While you’ll pay more for coverage, this addition ensures that if your spouse dies you’ll receive a death benefit, like your beneficiaries would if you die.
Spousal riders are less expensive than taking out a separate policy for your spouse, but that’s because they offer lower coverage. If you truly want to make sure your entire household is protected from the loss of your spouse’s financial contribution, your spouse should buy their own life insurance policy.
Most children don’t need life insurance. That’s because they have no dependents and almost certainly no income to replace if they die (unless they’re a child celebrity supporting their family). The main reason to consider buying life insurance for your kid is if you know that they have a medical condition that could make them harder or even impossible to insure later in life, and you want to make sure they lock in competitive rates now.
But if your child is healthy and not a movie star or famous Olympian, there still might be unexpected expenses you could incur if your child dies — like the costs of a funeral — that a small death benefit would cover. Child insurance riders are a good way to receive a small amount of coverage in return for a low increase in premiums.
Child insurance riders cost an additional $5.60 per month on average and pay out the death benefit if your child dies. Also known as child protection or child term riders, a single child rider can cover all the children in your household. They can be added to your policy when your child is about two weeks old and the term of the rider ends when they turn 18 (or up to 25 for some insurers).
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Accidental death and dismemberment insurance riders are for people who have riskier lifestyles, such as a dangerous job or hobby. This will increase your premium. The AD&D rider pays you from the death benefit if you die or lose a limb or digit in an accident. Because of the strict parameters under which the death or injury must occur to get a payout, an accidental death and dismemberment insurance rider usually isn’t worth the cost.
While long-term care riders help you manage unexpected illness or disability, benefit structure insurance riders trigger adjustments to the policy itself.
The return-of-premium insurance rider refunds the premiums you paid if you outlive the term of your policy. These can be expensive to tack on — sometimes triple your original premiums — because you pay an additional fee to get some of the cash back from your insurance company.
Although you get all that money back at the end of the term, you won’t get back the various administrative fees that can add up. You’re better off simply paying low premiums now and investing the equivalent of return-of-premium costs into a retirement account that will earn interest. With a return-of-premium insurance rider, the money you spend doesn’t earn interest and can end up making coverage unaffordable.
Some term policies are sold as return-of-premium insurance policies, meaning you don’t need to add anything to your policy to get your money back in the end. But you should still approach these policies with the same caution.
At the end of your term life insurance policy’s term, if you find that you still need coverage, you can convert a term life insurance policy into a permanent or whole life insurance policy with a term conversion rider.
You’ll pay a higher rate to extend your coverage for the rest of your life, but because of your age and potentially declining health, it may be cheaper to convert your policy than to reapply for a new one. And with a term conversion rider, you won’t have to retake the medical exam as you might have to when taking out a new policy.
The guaranteed insurability rider allows you to increase the size of your death benefit to a predetermined amount at specific intervals. Such milestones include reaching a certain age or after the policy has been in force for a certain number of years. Major life events, like marriage or having a baby, also trigger an increase of the death benefit.
You will have to pay more for the increase in coverage, but you won’t have to take a new medical exam and your health won’t be taken into account — which means you won’t get lower rates if your health declines. This rider is most commonly available on permanent policies, like whole life insurance and universal life insurance.
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Not all life insurance riders are created equal. While some can be a vital supplement to your life insurance policy, others cost more than they're worth.
For example, a term conversion insurance rider can ensure that you have adequate coverage even when your policy's term ends and is a worthwhile add-on because it comes at no additional cost. A waiver of premium rider, on the other hand, can be costly and hard to qualify for, which is why it's usually not recommended. Whether or not a life insurance rider is worth it depends on your life insurance needs.
The best way to determine what riders you should add to your life insurance policy is to speak with an independent broker like Policygenius about your individual circumstances. An agent can walk you through all your options and help you find the right one.
A life insurance rider offers additional coverage to create a more robust protection plan for you and your loved ones. It consists of additional terms and conditions that create more flexibility to adjust the terms of your policy or pay out to you while you are still alive.
In most cases, you cannot add a life insurance rider to an already active life insurance policy, but some insurance companies allow additions after you sign. When you are going through the underwriting process, you should talk to your agent about your life insurance rider options and designate which riders you want in your policy.
Life insurance riders offer the advantage of extra financial protection that isn’t a part of your standalone life insurance coverage. With a rider, you can be better prepared for unexpected circumstances, such as a disability.
Riders that don’t come with your policy for free can be costly, difficult to qualify for, and may not offer enough coverage.
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