Our previous blog post about life insurance riders explored what they are, five standard life insurance riders, and if life insurance riders are worth the additional cost.
This post expands the list with eight more options insurance companies offer to bolster your protection.
I | Quick Recap of Previously Mentioned Riders
Here are the riders we’ve looked at before.
- Guaranteed insurability rider allows your policy to grow with you without worrying about retaking your medical exam or fretting about what will happen if your health declines.
- Accelerated death benefit rider (or living benefit rider) unlocks your policy’s monetary benefits before your passing. It’s also known as a terminal illness rider.
- In the event of death caused by a covered accident, an accidental death benefit rider will double the payout your life insurance beneficiaries will receive.
- Disability and major illness can disrupt all of your financial plans. With a waiver of premium rider, you can save by not paying premiums while reaping the benefits of an active life insurance policy.
- If you’re considering a term life policy and losing your premium if you outlive it is a deal-breaker, add a return-of-premium rider on your base life insurance plan. This rider will grant you a full or partial refund if you live beyond the term.
Read the full post about Life Insurance Riders: What You Need To Know.
II | 8 More Life Insurance Riders for Added Protections
1. Family Income Benefit Rider
Family income benefit riders provide ongoing, monthly income to the beneficiaries when the insured person dies. Individuals who are the sole breadwinners usually purchase this rider to offset the financial gap their passing leaves behind.
When buying this rider, you’ll set a determined number of years your beneficiaries will receive the ongoing benefit.
2. Child Life Insurance Rider
Instead of buying a new policy, add a child life insurance rider to cover your child(ren).
Child life insurance riders provide a death benefit if a child passes before a specified age, typically between 20 and 25. These riders are inexpensive because the coverage amount is low ($5000 – $25,000), and the covered age group statistically presents a low risk for insurers.
Despite the lower payout, the money is usually enough to cover burial expenses. They can also help with paying off student loans.
If the child reaches maturity, you can convert the term plan into a separate permanent policy, increasing the original benefit amount without a medical exam.
Terms and conditions differ based on the insurer. Speak with your life insurance agent about applicable restrictions.
3. Long-Term Care (LTC) Insurance Rider
Long-term care riders are an alternative ng a separate long-term care insurance policy.
Like an accelerated death benefit rider, long-term care riders allow you to access your life insurance benefit while you’re alive. The only difference is that long-term care covers chronic illnesses while accelerated riders cover terminal diagnoses.
Long-term care riders cover the cost of extended care for policyholders who cannot handle two of the six Activities for Daily Living (ADL) by themselves. ADL tasks are eating, bathing, getting dressed, toileting, transferring, and continence.
This rider offers monthly payments to cover long-term care expenses from home care or admittance into a nursing home. LTC riders have high premiums as the policy keeps paying for your care even after you’ve exceeded the initial value of your death benefit.
An LTC rider differs from a standalone long-term care policy, which doesn’t offer death benefits.
4. Chronic Illness Insurance Rider
A chronic illness insurance rider also allows the insured access to their death benefit while alive. The rider kicks in when the policyholder can no longer perform two of the six daily living tasks. But, unlike LTC, the insured must be permanently incapacitated.
Chronic illness riders are cheaper than LTC and pay out benefits in lump sums or annual payments.
5. Spousal Insurance Rider
A spousal insurance rider pays death benefits if a policyholder’s spouse dies. This rider is an affordable option, but it doesn’t offer the full coverage or protection of an individual life insurance policy. However, it can help alleviate your concern about funeral expenses as supplemental coverage.
If the insured dies or the marriage ends in divorce, the spouse will lose coverage.
6. Term Conversion Rider
You can add a term conversion rider as a backup if you have a term life insurance policy. Should you reach the end of your current policy and still need coverage, the rider allows you to convert it into permanent coverage or a whole life insurance policy.
Check with your insurer about the conversion period and any applicable conditions. The conversion typically happens without the need for a medical exam.
7. Disability Income Rider
In the event of disability, as defined under your policy, disability income riders provide a monthly supplementary income.
Insurers specify the income as a percentage of your policy amount. For instance, if the value of your policy is $40,000 and the benefit is 1%, you’ll receive $400 in monthly benefits.
Consider this rider for additional benefits if your current occupation has a high risk of serious injuries that may cause disabilities. The additional protection would undoubtedly help with the hefty medical costs you may face. Speak with your agent about the extra cost and benefits you’ll receive.
8. Cost of Living Rider
A cost of living rider increases the insured’s coverage to match inflation and the Consumer Price Index (CPI). The percentage increase caps at about 5% a year. As the policy amount increases, so will your life insurance premiums.
Another name for this rider is the cost of living adjustment rider (COLA).
Conclusion
Devastating major life events can happen at any time. Buying a policy, and bolstering your coverage with a rider, offers you and your family financial protection.
The additional premium for extra coverage is an investment. Check the features of the life insurance policy riders your insurer provides. Which rider you choose depends on your life circumstances and needs.
