Life
Insurance Riders Defined
Riders are added to a life insurance policy for an extra
premium and provide additional supplemental benefits. Riders
are available with most life insurance policies including
term, universal and whole life. Following is a list
of riders typically available with most life insurance policies.
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Term Life Insurance Quote
- Accelerated Death Benefit Rider or Living
Needs Rider. This rider enables the
policy owner to receive a percentage of the policy
proceeds (death benefit) in advance of death if the
insured is diagnosed with a terminal illness. Depending
upon the company, before benefits are payable, there
must be a medical diagnosis whereby the insured is
not expected to live beyond 12-24 months. There are
usually limits to the amount of benefits available.
For example, up to 75% of the death benefit may be
accessed but no more than $500,000 in total benefits.
The living needs rider is a wonderful benefit proving
access to cash to cover medical procedures, payoff a
mortgage, take a vacation and plan the estate. The good
news is that most life insurance companies offer the
accelerated death benefit rider at no charge. Conditions
of this rider vary widely among life insurance companies
so be sure you understand your options. For more details,
see the sample accelerated benefit rider.
- Waiver
of Premium Rider or Disability Waiver of Premium. The
waiver of premium rider is essentially disability insurance
to cover your life insurance premium if you become disabled. If
you suffer disability, the insurance company will “waive” your
premium for as long as you are disabled.
The waiver
of premium rider is valuable but can be expensive
and for that reason most cheap term policies do not have
it. However, disability waiver of premium is very valuable
for whole life policies when premiums are significantly
higher. The way the waiver of premium rider works varies
from company to company and from policy to policy so
make sure that you read the fine print! Additionally,
a waiver of premium rider is not a substitute for individual
disability income insurance.
- Accidental
Death and Dismemberment Rider (AD&D). The
accidental death and dismemberment rider is available
with some but not all life insurance policies. It is
designed to provide a multiple of the base policy’s
death benefit, usually one or two times the original
face amount if you die from accidental causes or suffers
the loss of eyesight in both eyes or the use of both
limbs.
While there are only limited “accidental” circumstances
where these benefits are payable, you may be able be
able to pick-up these supplemental benefits at a very
low rate. When considering the AD & D rider, you
will want to carefully read the conditions for payment
of benefits as they are very restrictive. Additionally,
accidental insurance is never a substitute for ordinary
life insurance coverage.
- Children's Term Insurance
Rider. Child
riders are offered on most life insurance policies
and provide supplemental life insurance coverage for
your children. Coverage is usually available in increments
of $5,000 up to $25,000. With most companies, the insurance
is effective until your child reaches the age of 18
and if they are in college coverage may be effective
to their age 25.
The cost for a child rider is on average
about $30.00 a year per $5,000 of benefit and covers
all eligible children. Therefore the cost is insignificant
in most instances. However, on a relative basis, a children’s
term insurance rider is quite costly when compared to
ordinary term insurance. Child riders make more sense
if you have more than one child and the more children
you have the better deal it is!
- Spousal Term Insurance
Rider. A
spousal term insurance rider allows you to tack on
to your policy an additional amount of term life insurance
for your spouse without having to take out another
separate policy. Spousal term riders are usually10-year
level term plans that are renewable beyond 10 years.
When applying for the spousal term rider, an insurance
physical will be required. If you have are
considering covering your spouse, you may want to see
if there are options to add this rider and compare
the cost versus simply applying for another separate
policy for your spouse.
Summary
Life insurance policy riders provide added supplemental
policy benefits for an extra cost. Some if not all of
the riders above are available with most every life insurance
company. If you are shopping for life insurance, you
need to be aware of the riders available. For
a custom term life insurance quote or if you have questions
on the availability of policy riders, call MEG Financial
today at (877) 583-3955.
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