4Customizing Your Policy to Meet Your Specific Needs with Riders

Puzzle pieces

Because not all situations and protection needs are the same, there are numerous riders that are available that may be added to life insurance policies in order to add the necessary additional coverage. Some of the more common life insurance policy riders that are available include:

Waiver of Premium Rider

iStock_000019659642_LargeThe waiver of premium rider can free up the insured from having to make premium payments if he or she becomes either disabled or ill and is not able to make the policy’s premium payments. With a permanent life insurance policy, the cash value can continue growing, just as if premiums are continuing to be paid. Likewise, dividends may also continue, if applicable.

With this rider, there is typically a waiting period. In most instances, the insured must be ill or disabled for a period of at least six months. In addition, the insured must provide proof to the insurance company that they have a qualifying illness or disability.

Disability Income Rider

Senior man by minibus with wheelchair liftThe disability income rider allows the insured to collect a regular amount of income from the insurer should he or she become disabled and unable to work. The policy specifies the amount of the income, as well as whether or not the income will be paid out for a certain amount of time, or for the entire length of the insured’s disability. There are some disability income riders that will pay only if the insured becomes disabled
as a result of an accident, whereas others will pay regardless of whether the disability occurs due to an illness or an accident.

Accidental Death Benefit Rider

Bedside GriefBy having the accidental death benefit rider on a policy, should the insured die from an accident, the life insurance policy will provide an additional amount of benefit to the beneficiary. The insured’s death must usually occur within 90 days of the accident.

Accelerated Death Benefit Rider

Sick mature woman lying in bedThe accelerated death benefit rider should not be confused with the accidental death benefit rider. It is with an accelerated death benefit rider where the insured may collect a portion of the death benefit should they become terminally ill and only have a short life expectancy (generally only one year or less). The proceeds may be used for any purpose by the insured.

Term Conversion Rider

iStock_000012206122_XXXLargeWith a term conversion rider, the policy owner can convert a term life insurance policy over to a permanent life insurance policy without having to take a medical examination. Typically, there is a deadline for when the policy must be converted if the policy owner wishes to do so. If he or she waits too long, they will be required to present evidence of insurability if they want to convert at a later time.

Return of Premium Rider

iStock_000019659642_LargeThe return of premium rider allows an insured to receive their premiums back if they live through to the end of their policy’s term. For example, if an individual purchases a 20-year term life insurance policy and they are still living at the end of that 20-year period, they will receive a refund of the policy premiums. This rider typically requires a substantial amount of additional premium.

Child Protection Rider

iStock_000006140039_LargeThe child protection rider can help those who find themselves in the difficult situation of losing a child to death. This rider that provides term life insurance benefits can be placed as additional coverage on the policy of a parent. Basic information about the child’s health is usually required for underwriting.

Critical Illness Rider

Senior man in hospital bed holding wife's handAlthough there a numerous benefits that life insurance can provide for individuals and families, it can also be used to protect a business. For most business owners, one of the primary concerns is business continuity if an owner, partner, or key executive dies. Just as with individual situations, life insurance can offer a lump sum of cash to help solve immediate financial needs, as well as ongoing requirements.