Term life insurance is an essential insurance option that protects your loved ones against financial hardship if something were to unexpectedly happen to you. In order to get the coverage that best fits your needs, you can add additional benefits to your policy (add-ons called riders) at the time of purchase.
Life insurance riders supplement your term life policy with more coverage by offering additional protection from the potential loss of income due to terminal illness, disability, or other adverse life events.
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These policy add-ons are referred to as riders. Riders vary by insurance company and by policy, as do their costs.
It’s also good to note that adding a rider to your term life insurance may increase your life insurance premiums, so make sure the extra coverage is worth the cost.
While many riders are available, the following types are the most common:
A great feature of term life insurance is the ability to customize it for your particular situation and lifestyle with policy riders.
Term Conversion Rider
Convertible term life insurance is simply a term life insurance policy with a term conversion rider added on. Because term conversion riders are so common and usually automatically included, these policies are just referred to as a convertible term policy.
A term conversion rider allows you to convert your term life insurance policy to a permanent policy without having to go through underwriting or take another medical exam. A term policy may have been perfect for you when you were younger, but as you age, a permanent policy may fit your situation better.
This rider is built into most life insurance policies and is extremely beneficial if you happen to run into health issues as you age. Having the ability to convert your term policy to a permanent policy could mean the difference between having a term policy that runs out or one that could be converted with a claim being paid.
Disability Income Rider
The disability income rider provides a waiver of premium and a supplementary income if you were to become disabled.
The supplementary income is based typically on the face amount of your policy. Most insurance companies will place a limit on how much will be paid per month and on the length of time you will receive the benefit. This rider is very similar to a long-term disability insurance policy, but it can be conveniently added to your policy rather than you having to purchase it separately.
Long-Term Care Rider
A long-term care rider is similar to a long-term care insurance policy.
Money is taken from your death benefit to pay for your care if you become chronically ill and are unable to take care of yourself. You can use this benefit if you have to stay at a nursing home or receive home care.
With this rider, it’s important to keep in mind that the maximum benefit is typically only a percentage of the life insurance policy’s face amount and it is taken from your death benefit.
Critical Illness Rider
A critical illness rider will provide a lump-sum benefit to help cover medical expenses and other costs if you were to be diagnosed with a critical health condition.
This benefit is taken out of your death benefit and covers illnesses such as cancer, stroke, heart attack, coma, and others.
Medical expenses can add up quickly with a critical illness and many people don’t have an emergency fund large enough to cover these expenses. This is why you may opt to add a critical illness rider.
Accelerated Death Benefit Rider
The accelerated death benefit rider pays a portion of the death benefit to you (the insured) if you become terminally ill with a short life expectancy.
On most term life insurance policies, this rider is included automatically for free. The policy states how much of the death benefit would be available before death and it’s usually capped at $250,000 to $500,000.
A child rider provides coverage should the death of a child occur.
While this tragedy would not result in loss of income, it could still bear financial hardship for a grieving family in regards to taking off work and funeral expenses.
This rider would provide financial assistance during a difficult time.
Once the child reaches the age of 25, the rider can be converted to an individual life insurance policy without an exam.
For a special needs child, who might not otherwise be insurable, the child rider is an essential addition for a parent who is buying a term life insurance policy. If you have a special needs child, do speak with our agents so that they can help you get the most protection for your child at the time of purchase.
The spousal rider allows you to add on life insurance to cover your spouse versus owning two separate life insurance policies. A spousal rider provides term coverage only for a specific period of time.
When purchasing insurance, you may add virtually any form of term insurance to a base permanent policy in the form of a term rider. This option would be beneficial to policyowners who have a temporary need in addition to their long-term need.
Guaranteed Insurability Rider
If added to the purchase of your term life insurance policy, the guaranteed insurability rider (called an additional purchase option) guarantees your policy’s renewability at the end of its term. If you decide to renew your policy, you will not be required to provide additional proof of insurability.
This rider is useful if you want to purchase a permanent policy, but are unable to afford the premiums for large face amounts at that time or think you may need more coverage later in life.
This rider gives you the option to purchase additional coverage in the future without evidence of insurability.
Waiver of Premium Rider
A waiver of premium rider ensures that you would not need to pay the premiums on your life insurance policy should you become totally disabled and can’t work.
For most insurance companies, the disability needs to last six months or more before benefits begin. Some companies will reimburse the payments made during the six-month waiting period.
Unemployment Protection Rider
An unemployment protection rider ensures that you would not need to pay the premiums on your life insurance policy, if you would lose your job.
You need to show proof that you have been receiving unemployment benefits for four continuous weeks before benefits begin. With most insurance companies, this rider expires when you turn 65 years old.
Accidental Death Benefit Rider
The accidental death benefit rider (called a double indemnity rider) increases the death benefit, if you die as the result of an accident.
Sometimes this rider also includes additional payment for dismemberment; you would collect money if you lost a limb or your sight. Be aware that life insurers do consider your occupation and hobbies when determining these premiums.
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Return of Premium Rider
With the return of premium rider, you pay higher life insurance premiums for the opportunity to get all of your money back if you live past the term on your life insurance policy.
There are many factors to consider when shopping for life insurance. The amount and type of life insurance you need depends on factors such as income, your dependents, debt, lifestyle, and how much risk you are willing to take.
We have covered here the most common types of life insurance riders, but this list is not exhaustive.
Life insurance is a very personal decision and should be determined thoughtfully.
About the writer
Writer, Editor, and Co-host of Quotacy's Q&A Fridays
Natasha is the content manager and editor for Quotacy. She has been in the life insurance industry since 2010 and has been making life insurance easier to understand with her writing since 2014. When not at work, she's probably studying and working toward her Chartered Life Underwriter (CLU) designation while throwing a tennis ball for her pitbull mix, Emmett, or curled up on her couch watching Netflix. If it’s football season, the Packers game will be on. Connect with her on LinkedIn.