Life Insurance Riders, What are They For?

by Andrew J. Cavaliere

“Riders” are modifications to the life insurance policy added at the time the policy is issued that are not found in the original contract. These riders change or adjust the basic policy to provide some feature desired by the policy owner. Depending on the type of life insurance policy you purchase, there are a wide variety of riders that you can buy to enhance your policy’s benefits. Because all riders provide an additional benefit to the policy owner, an extra premium may be charged for them. Let’s look at some of these riders:

  • Accidental Death Benefit Rider used to be commonly referred to as "double indemnity," and pays twice the amount of the policy face value if death results from accidental causes, as if both a full coverage policy and an accidental death policy were in effect on the insured.
  • Accelerated Death Benefit Rider permits the insured who is diagnosed as terminally ill, or who requires long-term care or permanent confinement in a nursing home, to collect part of the death benefit from the policy on their life while they are still alive. The rider specifies exactly how much of the death benefit may be available, usually 75%. This can help relieve some of the financial burden caused by an insured's inability to continue working and the rising cost of health care. Death benefits payable under the policy are reduced by any amounts paid under this rider.
  • Disability Income Rider provides a regular monthly income from the insurance company should the insured become totally and permanently disabled. The rider guarantees a specified level of income for either as long as the disability lasts or for a specific time frame outlined at issue.
  • Waiver of Premium Rider exempts a disabled insured from making required premiums payments during the term of the disability while keeping the policy in force. This rider usually is in effect until age 60, but waiver of premium may vary from company to company and from policy to policy. Generally, proof of total and permanent disability is required from the United States Social Security Administration.
  • Accidental Death Dismemberment (AD&D) Benefit Rider not only pays twice the amount of the policy face value if death results from accidental causes, but also pays additional benefits for dismemberment like if the insured loses sight in both eyes or suffers the loss of any two limbs. Often the benefit schedule pays a smaller amount for the loss of sight in only one eye or the loss of only one limb.
  • Spouse & Children Insurance Rider provides additional amounts of life insurance coverage on the insured’s spouse and/or children. These riders usually are limited to a specified face amount by the company.
  • Return of Premium Rider (ROP) is available on term life insurance policies, such that at the conclusion of the term of coverage, if the insured is still alive, the policy owner is remitted the sum of all their premium payments.
  • Long-Term Care Rider works much like a disability income rider in providing coverage to pay a monthly benefit if the insured comes to require long-term care. This may or may not coincide with an acute debilitation.

For more information about Life and Health Insurance planning please contact Andrew J. Cavaliere at Annuity Managers Agency, LLC at 877-676-9900 or Andrew is certified in Long-Term Care (CLTC) from the Corporation for Long-Term Care Certification and a member in good standing of the Million Dollar Round Table (MDRT).

IAC Member Benefit: National Health Plan PPO is only available to IAC members. The BCBS Association Network is the largest in the country. No referral required!

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