Choosing and buying life insurance can be fairly complicated since it requires you to make judgments and predictions about when and how you might die. Though it’s a frustrating financial decision to make, understanding your options can help. Most basic life insurance companies often offer incomplete coverage. By adding life insurance riders to your policy, you could expand your coverage and give your loved ones more peace of mind. Here’s everything you need to know about life insurance riders.
What Is a Life Insurance Rider?
Life insurance riders can add to your life insurance; the coverage that isn’t typically included in a basic policy. A basic life insurance policy typically covers an individual person in case of death by illness or natural causes. It pays out a fixed amount to the family if the insured dies within the stated number of years or anytime before age 100. Generally, a rider adds a cost to your premium and expands the limits of your coverage, by adding beneficiaries. This allows more events to lead to a payout.
Types of Riders
Common life insurance riders include:
Long-Term Care (LTC): Beneficiaries can receive a portion of the death benefit while the insured is still alive to cover long-term health care costs.
Return of Premium: One can receive the cost of their premiums back (but not the cost of the rider) if they outlive the term of their life insurance policy.
Accelerated Death Benefit (ADB): ADB or Living Benefit is when beneficiaries receive a part of the death benefit before the insured dies, due to a trigger, such as a chronic or terminal illness.
Accidental Death and Dismemberment (AD&D): This coverage extends to pay the death benefit in case of accidental death or the loss of a body part or function.
Spousal or Child Rider: Additional coverage can be added for spouses and children under one life insurance policy.
Term Conversion: With increased premiums, a term life policy can be turned into a whole life policy at any time
Waiver of Premium and Payor Riders: One can stop paying premiums if the policyholder becomes injured, critically ill, or disabled.
Guaranteed Insurability (GI): One can choose to increase the death benefit amount in case of major life events like marriage, birth, or adoption of a child without undergoing another medical exam or questionnaire.
