The Ins and Outs of a Life Insurance Rider Policy

Did you know you may be able to add features to your life insurance that allow you to customize your policy? Life insurance riders are add-ons to a policy that you can use to personalize your life insurance to better suit your needs. Although some life insurance riders may increase your premiums, others may be added for no additional charge. Riders may be a cost-effective way to get the life insurance coverage you need without having to buy an additional policy.

When Is the Best Time to Add or Drop a Rider to Your Life Insurance?

The best time to add a rider is when you purchase your life insurance policy. If you decide to add one at a later date, you will probably be required to go through underwriting again with a second medical exam. It is far better to add the riders you want at the beginning of the policy. On the other hand, you may drop a rider from your policy at any time simply by completing a form.

What Options Are Available for Life Insurance Riders?

There are many different types of life insurance riders. Availability can depend on the insurance company and the type of life insurance policy. Common life insurance riders include the following:

• Life benefit rider: Also known as an accelerated death benefit rider, this is often included in life insurance policies for no additional charge. It allows you to use your own death benefits tax-free during your lifetime if you have been diagnosed with a terminal illness.
• Term life insurance conversion rider: This lets you convert term life insurance to permanent life insurance. If your health declines after you purchase term life insurance, a conversion rider can help you keep the costs of permanent life insurance down.
• Waiver of premium rider: If you become disabled, this rider allows you to stop paying your life insurance premiums. It is important to understand exactly how the life insurance company defines “disability.” You may only qualify to use this rider if you are totally and permanently disabled.
• Long-term care rider: With this rider, you can use death benefit money from your policy to pay for long-term care if it is required. This will lower the amount of death benefits your beneficiaries receive. Long-term care riders may cost several hundred dollars monthly.
• Return of premium rider: If you live longer than the term of your life insurance policy, you can get a refund of the premiums you paid with this rider.
• Guaranteed insurability rider: This rider is only available for permanent life insurance policies. It allows you to increase your death benefit amount without repeating the full application process, including health questions and a medical exam. A guaranteed insurability rider may be a good idea if you expect your financial obligations and coverage needs to increase in the future.

Before you purchase a policy, our knowledgeable agent can discuss your options for riders with you and help you customize your life insurance to suit your individual needs.