What are life insurance riders?
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Asked July 9, 2012
A life insurance rider is a modification made to the policy, or additional coverage added to it. Riders typically provide additional coverage, such as disability or hardship, allowing people to maintain their life insurance even in the vent of serious financial or health problems. Riders are available for most types of insurance, and vary by the type being written. For life insurance riders, the typical usage is to include methods of coping with various hardships, ranging from deteriorating health to the death of a child.
Common life insurance riders include such things as a waiver of premium rider which cancels premiums on the policy if you become seriously ill, or the similar disability rider which will cover your premiums if you should become disabled. Another rider, called guaranteed insurability, gives you the option of increasing the amount of coverage at a later date without consideration for health or other conditions which could make you uninsurable under traditional rules.
If you have a term life insurance policy, there is a rider available which will allow you to convert the policy to permanent life insurance coverage at a later date. This could be a good rider to have, because as you near the end of the term, some consideration may need to be given to future insurance after the current policy expires.
Another rider, called accelerated death benefits, would allow you to collect a portion of the policy value yourself if you become terminally ill and are expected to pass away in a relatively short period of time, such as one year. This does not allow you to collect the full value of the policy, only a portion of it, and the precise amount differs from policy to policy. You may not need to add a rider for accelerated death benefits, though, because many insurance companies now offer this protection automatically in a whole life policy.
There is also a rider available called return of premium which will return your premiums to you if you outlive the term of the policy. Bear in mind that most whole life policies do not mature until you are at least 90, and it is not unusual for the maturity to be defined as 100 years, or even older.
Answered July 9, 2012 by Anonymous