Common Riders
Most life insurance policies may be modified by rider or endorsement to attach additional benefits. A few riders are sometimes no cost and some do come with additional cost. It depends on the company. The examples below are based on different company guidelines. Also riders can sometimes only be available at time of issue or application.
Child/Grandchild Benefit Rider
This is a benefit for when there is a death of a child or grandchild subject to the limitations of the rider for the company. In some cases, the rider may pay up to age 25. Some companies provide this for free and some have a charge.
Disability Waiver of Premium
This rider waives premium in the event of total disability of the insured. This rider is very practical since it is inexpensive and keeps the life insurance in force in the event of disability. It usually expires at a certain age but if disability occurs before that age the rider will pay premiums beyond the expiration date. There is often a waiting period such as six months before the rider is in force and will remain in force as long as disabled as defined by the policy.
Accelerated Benefit Rider
This rider can come in three forms: Critical Illness rider, Chronic Illness rider and Terminal illness rider. All three pay a living benefit up to a certain percentage of face value. Another words you can receive a payout while you are still living to help pay for things such as medical expenses. There are some administrative and other fees at payout.
Let’s look at an example of each. These are only examples. The policy you take could be slightly different dependent on company:
Critical Illness Rider
This rider may be exercised if you have one of the following: cancer (life threatening), heart attack, stroke, paralysis, end state renal failure, and major organ transplant. This rider can pay up to 25% of face value with a maximum dollar amount.
Chronic Illness Rider
This rider may be exercised if A chronic illness is a condition that causes you to be unable to perform 2 or more ADLs (activities of daily living: bathing, continence, dressing, eating, toileting, and transferring). Maximum amount of acceleration is 80% of death benefit with a maximum dollar amount if percentage is more than maximum.
Terminal Illness Rider
Terminal illness is a qualifying event where you are expected to only live for 12 months or less. Maximum amount of acceleration is 90% of death benefit with a maximum dollar amount if percentage is more than maximum.
Accidental Death Rider
This rider also sometimes called multiple indemnity provides an additional death benefit only if the death is accidental. It pays sometimes up to 10 times the face amount of the base policy. It is relatively inexpensive because the chance of accidental death is small and you should not rely on this as additional insurance. Some feel it is best to use the extra dollars or additional base coverage. Also the coverage expires for example at age 65.
Guaranteed Insurability Rider
A guaranteed insurability rider protects the insured’s ability to purchase life insurance in the future. With this rider it doesn’t matter the insured’s health or occupation are at certain dates in the future, he or she may buy a certain amount of additional life insurance at standard rates. The typical option permits additional purchases of life insurance periodically without evidence of insurability up to some stated age such as 60. Also there could be a cap on how much additional you can buy over time. Certain life events can also trigger the ability to purchase more insurance such as marriage, children or purchase of primary residence.