If you’ve ever purchased or leased a car, you’re probably familiar with those extra add-on options that can offer you some additional protection — like maintenance plans, rust-proof coatings and windshield insurance.
Well, think of life insurance riders as the add-ons of insurance. They can be really helpful, but whether or not you need them depends on your family’s unique circumstances.
What is a Rider in Insurance?
If your carrier offers life insurance riders, you may have the option of adding one or more to your policy. A rider attached to a life insurance policy provides additional benefits that your standard policy may not include (and typically adds some extra cost as an additional premium). There are several types of life insurance riders, and while this article isn’t all-inclusive, the list below covers quite a few.
Accidental Death and Dismemberment Rider (AD&D)
Rest assured; all life insurance policies cover accidental death. If you already have life insurance and were to pass away while cliff diving or parasailing, you would be covered. However, if you do these types of daring activities regularly or make a living with a risky profession (skydiving teacher, lion tamer, etc.), you might want to look into an AD&D rider.
If you add this type of rider to your policy and lose a limb, finger, or toe in an accident, you will receive some of your death benefit as a payout while you are alive. And if you die in a predefined type of accident with this rider on your policy, your beneficiaries receive a larger payout than your death benefit.
An AD&D rider is not to be confused with AD&D insurance, a type of stand-alone insurance policy with similar coverage to the rider version. The big difference: life insurance covers almost any type of death and an AD&D rider provides supplemental coverage while AD&D insurance covers only death or dismemberment by accident, and not death in general.
Critical Illness Insurance Rider
A critical illness insurance rider pays out a benefit if you are diagnosed with specific illnesses. Some of the diagnoses that may be covered by critical illness life insurance policy riders include cancer, organ transplant, heart attack, stroke, kidney failure, or other serious diseases.
If you add a critical illness rider to a life insurance policy and qualify for the benefit, the money you receive is subtracted from the death benefit of your policy. When you pass away, your beneficiaries would receive the remaining balance.
Chronic Illness Insurance Rider: When this type of rider is attached to a life insurance policy, it offers a benefit for permanent conditions if they inhibit the policyholder from doing at least two of the basic Activities of Daily Living. If you purchase a chronic illness insurance rider and were to qualify for coverage, the payout would come from your death benefit.
Long-term Care (LTC) Insurance Rider: This life insurance rider is typically only available on permanent life insurance policies. LTC is a type of insurance rider that can help cover the cost of a nursing facility should you lose the ability to do two or more of the six basic Activities of Daily Living (ADL): walking, eating, dressing, personal hygiene, toileting, and the ability to get in and out of bed or a chair.
There are a few different types of LTC riders you can choose from. They are typically available as reimbursement or per diem options, and it’s good to note that LTC riders tend to be one of the more expensive life insurance riders on the market..
Family Insurance Riders
Adding on a family income benefit rider to your life insurance policy can offer your loved ones an extra layer of financial protection, but it also changes the way your beneficiary will receive the death benefit on your policy if you pass away.
Normally, a death benefit is paid out in one lump sum. However, if you add a family income benefit rider, your beneficiary would receive installment payments equivalent to your monthly income. At the end of the rider’s term, your beneficiary would then receive your policy’s death benefit in full.
- Child Insurance Rider: While minors do not typically need life insurance, adding a child insurance rider provides some supplemental coverage should a dependent child pass away. It’s unimaginable, but if anything were to happen to a child, this rider can help cover funeral costs or allow time off to grieve.
- Spousal Insurance Rider: If your spouse doesn’t earn a lot of income but does hold down the household, a spousal insurance rider could help cover the costs of childcare, housekeeping, and transportation should they die before you.
Waiver of Premium Rider
Could you pay for your life insurance if something tragic happened to you? If you become incapacitated, seriously impaired, or critically ill, a waiver of premium rider would keep your policy valid if you are unable to make your premium payments.
Accelerated Death Benefit Insurance Rider (ADB)
Adding an ADB rider to a policy can provide some peace of mind should you ever face a terminal illness. With this rider attached to a life insurance policy the death benefit can be used while you are still alive to pay for any medical expenses you might face such as an in-home nurse. Some ADB riders even cover last wishes, like one last family vacation.
Some insurance companies offer this benefit at no additional cost. If you have an ADB rider on your life insurance policy, a doctor’s note is usually required to activate it.
Term Life Rider
Term life insurance is a great option for many people because it is the most cost-efficient type of life insurance. These types of policies are purchased for a term, usually anywhere from ten to thirty years. Permanent life insurance policies, like whole life and universal life, do not have term periods and last the policyholder’s lifetime, as long as premium payments are made.
When purchased with a permanent life insurance policy, a term life rider offers the insured an opportunity to temporarily increase the policy’s death benefit for a select period of time. One important note — your premium will be higher during this rider’s term, and then decrease when the term rider expires.
Here’s an example: if you have a $100,000 permanent policy and ten years left to pay off your mortgage, you might consider purchasing a ten-year term life rider for the amount you owe on your house. That way, if anything were to happen to you before your home is paid off, your loved ones could continue living there and still have the initial death benefit to help them through their loss.
Term Life Insurance
If you are searching for the best insurance riders, that list doesn’t exist. There is no “best rider to add to your policy” because everyone’s lifestyle and needs are different. Take some time to think about your needs, compare the cost and benefits of various riders, and then decide if it makes sense for your life insurance plan.
If what you’re really looking for is straightforward, affordable coverage, consider getting a free, instant quote for term life insurance with Bestow. If you like what you see, the 100% online application takes most people less than ten minutes to complete. There are no riders, no medical exams, no trips to the lab, and no lengthy interviews. Just you, your computer (or phone), and a couple of clicks. That’s it. Everyone gets a same-day decision — no waiting or wondering here. If approved, you can purchase coverage from $50,000 up to $1.5 million with rates starting from just $11 per month.