Life is unpredictable, and so are your insurance needs. Adding optional riders to your life insurance policy can be a good way to ensure you’re covered, no matter what the future holds.
Here’s a comprehensive look at what riders are and whether they’re worth the additional cost they may bring.
What Are Life Insurance Riders?
A rider is an add-on to your insurance policy that overrides your original contract terms. For example, a life insurance rider may guarantee your ability to buy more coverage later or allow you to access part of the policy’s death benefit during your lifetime.
These policy amendments are optional and typically increase your premium—though often by a modest amount. The exact cost depends on many factors, including the type of rider and, in some cases, how much additional coverage it provides.
Adding riders to your life insurance contract can be an effective way to customize your coverage so your family or business has the financial protection it needs. However, being selective is important. Understand what add-ons are available, and choose the ones that suit your situation.
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Common Life Insurance Riders
Depending on your life insurance type, your insurer may offer several common policy add-ons.
Waiver of Premium Rider
Should you experience a serious disability that hinders your ability to work, a waiver of premium rider allows you to miss your premium payments. Your policy remains in force for as long as you have the qualifying injury or illness. However, depending on your policy, there may be a waiting period before the waiver goes into effect.
Cost: Usually $10 a month or more, depending on your age and policy size.
Accelerated Benefit Rider
If you’re diagnosed with a terminal illness, an accelerated benefit rider allows you to receive part of your death benefit while you’re still alive. Some riders allow you to withdraw up to 50 percent of your death benefit, although the limit varies by insurer. The amount you withdraw as a living benefit typically reduces your beneficiaries‘ death benefit by an equal amount.
Cost: Often free of charge, but requires applicable paperwork.
Critical Illness Rider
A critical illness rider enables you to receive a portion of the death benefit if you’re diagnosed with certain serious, but not terminal, illnesses. Qualifying medical conditions may include cancer, a heart attack, a major organ transplant, paralysis, or stroke. As with an accelerated benefit rider, any amount you receive after your diagnosis is subtracted from your beneficiaries’ death benefit.
Cost: Usually available for a small fee, or even free, depending on the provider.
Guaranteed Insurability Rider
After you purchase your policy, a guaranteed insurability rider allows you to take out additional coverage without going through medical underwriting again. Typically only offered with whole life policies, this rider allows you to buy extra coverage based on your age and health status when the policy originated. Usually, you’re allowed to increase your death benefit size at certain “option dates” that occur every few years or if you experience a life event such as a marriage or the birth of a child.
Cost: Usually around $5 a month.
Accidental Death and Dismemberment (AD&D) Rider
An AD&D rider pays an extra amount to your beneficiaries if a qualifying accident results in your death. Should you lose a limb—or lose the functioning of a body part—the rider may pay this additional benefit directly to you. What counts as a qualifying event varies by insurer, so read the rider details before adding it to your policy.
Cost: Dependent on the extra coverage amount provided.
Child Life Insurance Rider
A child passing away is always tragic. Final arrangements can also create a financial challenge for some families. A child life insurance rider pays a modest benefit to you if your child passes away, alleviating this budgetary strain and enabling you to properly grieve.
Most child insurance riders cover all your current and future children, including those you adopt. Depending on your insurer, you may be able to convert this coverage into a permanent life insurance policy when your child reaches a certain age.
Cost: Usually around $5 to $10 a month.
How to Add or Remove a Rider on Your Policy
In most cases, it’s best to add a rider when you first take out your life insurance policy. While you may be able to add the amendment later, you typically have to go through the underwriting process again to do so. If you’re significantly older or were diagnosed with a medical condition since buying your original policy, that can increase the policy amendment cost.
If you add a rider to your policy and change your mind, removing it is fairly easy. Generally, all you have to do is fill out a form that removes the optional coverage from your policy. Your life insurance representative or broker can provide the necessary paperwork.
Tailoring Life Insurance to Your Needs
No two families have the same financial needs, which means a standard life insurance policy may not provide the coverage you and your loved ones require. Interested in getting some professional guidance tailored to your situation? Speak with a Colonial Penn insurance representative about which riders are available for your policy so you can customize your protection.
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