Life Insurance is perhaps the most sensible purchase you can make. It provides a large sum to your family in an event of sudden death in return for a small monthly payment. However what many people don’t know is you can make your life insurance policy even better. Yes you can upgrade your policy through policy riders which are like add ons to your life insurance contract. Some of these add ons come built in with your life insurance plan, and others you might have to pay a little more for. So let’s cover different types of riders to get a better idea of how you can tailor a plan to meet your specific needs.
1. Accelerated Death Benefit Rider/Terminal Illness Rider
This rider is usually built in with most life insurance policies at no extra cost. In the event you were diagnosed with a terminal illness with less than 12 or 24 months life expectancy, the carrier would pay out up to 60% of the coverage amount while you are still alive. You can use those funds to help pay for the medical treatment and to improve quality of life with the little time you may have left. If you do beat the illness you won’t have to pay anything back but your life insurance protection amount will be reduced by the benefit you received.
2. Accidental Death Benefit Rider
A great addition to your policy for it’s cost. Basically what this rider provides is that if the cause of death is due to an accident the company will payout double the amount to your beneficiaries. So if your policy was for $500,000 but you had an accidental death rider and were to die due to an accident, your family would get a total of $1,000,0000! This is a must for people with higher risk occupations.
3. Waiver of Premium
This rider will waive your obligation to make your monthly premiums if you were to become disabled. In other words the life insurance company will pay your premiums and your policy would stay in force. It can be helpful since money can be tight if you become disabled.
4. Return of Premium Rider
If you happen to outlive your term life insurance, what this rider will do is entitle you to all the payments you have made over the life of your policy. That’s right you will get 100% money back if you outlive your term coverage. The only bad part is that when adding this rider, your monthly payment will increase up to 50%.
5. Child Rider
This rider allows your children to have life insurance protection under your policy without any additional paperwork. Children under the age of 17 qualify for this rider and can remain on your policy until age 25. Afterwards the policy can be converted to an individual policy that they can keep for themselves. A child rider is sold in units, each unit is a thousand dollars worth of coverage and you can get up to 50 units per child depending on the company you select. Best part is that one child rider will provide coverage on as many children you have. So whether you have one child or six children, it’s the same cost for the rider.
6. Guaranteed Insurability Rider
A type of rider that can be added as a provision to some permanent types of life insurance policies. It gives the owner of the policy an ability to purchase additional life insurance at a future date without proof of insurability. This can be a great option since you don’t know if you will be insurable in the near future due to your health.
This covers the most commonly used life insurance riders out there. However, there are more riders that are sometimes specific to certain products so it’s best to speak with your agent and ask about any riders during an application.
