Even the basic life insurance policy can have some terms that you may not resonate with. What if you’re interested in the plan, but you don’t want the waiting period, or maybe want more death benefit? Wouldn’t it be great if a mainstream life insurance policy could be tweaked a little to exactly meet your needs?
This concept of customizing life insurance policies isn’t entirely new; insurance policy riders are add-ons that are added to your system to tweak it and be personalized just for you.
Just like a burger meal is made according to your taste by adding on cheese or maybe a special sauce, insurance policies have riders that are designed to suit specific customer requirements.
Let’s go into more detail.
To make amends or add benefits to a standard life insurance policy, a rider is added to the existing plan. The options provided include additional coverage or maybe restricted coverage on lower premiums. Depending on every policyholder, these riders make a policy plan customized for each client.
Of course, the policyholder has to buy the add-ons to be attached to the policy. These are indeed very low in price because they provide small additional benefits to an existing basic life insurance policy.
There are different riders that policyholders can choose to add in their policy plan. There is no limit, and you can purchase as many riders as you want. Even though an individual policy rider may not be cheap, adding more to the plan will surely be a little expensive. So if you can afford, then only buy riders.
Here are the common types of health insurance riders:
Accidental Death Rider: If a policyholder dies from an accident, the accidental death rider gives an additional amount plus the death benefit to the beneficiaries of the insured. If the accident causes bodily injury resulting in death, the recipients may receive even twice the amount of the policy. It is essential to know exactly what type of ‘accidents’ will be covered in this rider because some companies may limit the number of accidents.
Waiver of Premium Rider: This is a kind of add-on to the life insurance policy where the policyholder is waived of paying all future premiums if they become severely ill or permanently disabled. Being the breadwinner of the family if a person is disabled and can’t earn anymore, they are waived off from paying the premiums. This waiver is applicable just as long as the disability isn’t recovered or until the policyholder reaches retirement age.
Family Income Benefit Rider: This rider is a type of the death benefit which is paid every month. If the insured person dies, their salary or monthly income is paid to the beneficiaries by the insurance company. This is usually purchased by people who are sole breadwinners of the family and would want financial consistency in their family even after they died. The policyholder has to specify the number of years that this rider will be in force until the family can earn for themselves.
Long-Term Care Rider: If the policyholder has to spend their life in a nursing home or extensive care, this policy rider provides the insured person monthly payments to pay for their care. This is usually purchased by older people who don’t have a family living with them and who have to spend their years in a care unit. This type of rider lets you take money from your death benefit and use it if you need long-term care.
Return of Premium Rider: Attached with term life insurance policy, if an insured person outlives their term, this rider refunds some part of the premiums they have already paid. On some life insurance policies too if a policyholder dies during the waiting period of 1-3 years, the premiums they paid overtime are refunded back to the beneficiaries and often on a 7-10% interest rate. This is a useful policy rider if the policyholder is sick and may not survive the waiting period.
Accelerated Death Benefit: An accelerated death benefit is given to the policyholder during their life if they are diagnosed with a terminal illness and don’t have many years to live. They can withdraw the death benefit of up to 80% or however the situation deems appropriate. This is a cheap rider option where the policyholder can use the death benefit up to a certain percentage of the face value.
Guaranteed Insurability Rider: This is a prevalent form of a rider on a life insurance policy. After a couple of years, if a policyholder’s health deteriorates as a result of diabetes or a heart attack, they might need additional coverage on their life insurance plan. In such a case, a guaranteed insurability rider will ensure that the policyholder continues to receive coverage and other benefits as they suit the rider policy.
Not every rider is costly; there are some free riders as well. A free rider is a person who gets the rider without having to pay for the add-on. Some insurance companies mainly offer such benefits to policyholders where each policy they apply to have free riders. But, since free riders are financial stress on the insurance company, they usually don’t offer it to all policyholders. They often have a criterion where they decide which people will get free riders.
Rider benefits in life insurance are a sigh of relief for many policyholders. According to their specific requirements, insured people can purchase riders to help them get added benefits to their life insurance policy. There are different types that insurance companies offer; you have to see which rider suits your needs most.