Life Insurance Rider Policies: What Add-Ons Are Right for You?
So, you know you need life insurance, but what kind of policy is right for you? The answer is different for everyone. Depending on your situation, you can purchase a plan that offers the basic levels of coverage or customize your plan with rider policies that increase your benefits. Having one or more of these riders can put your mind at ease knowing that there's added security in the event of illness, accident, or death.
What Are Life Insurance Riders?
The term rider is a word that simply means an addition or change to a legal contract. You'll come across riders with various purposes in different industries, but in the world of life insurance, they're designed to enhance the benefits that you and your loved ones receive. While you could expect your premium to rise depending on the riders you include, but the added cost could be worth it in the end.
Common Types of Riders
The riders available to you depend on your insurance company. Not all companies offer the same riders, and not all riders are available in each state. Additionally, not everyone will qualify for every rider. However, there are common policies you'll see when shopping for insurance and they're generally divided into four different categories:
- Living benefits
- Accidental death
- Family coverage
- Structure of benefits
These riders allow you to use your benefits to pay for qualifying expenses while you're still alive. Depending on your policy, you might be able to access all or just a portion of your total benefit amount. Insurance companies also have specific rules for what circumstances they cover, so it's important to understand the terms of your plan.
There are 5 primary types of living benefit rider policies:
In most cases, an accidental death rider pays your beneficiary a benefit in the event that there's an accident that leads to your death. It can also provide coverage if you lose a limb or digit due to an accident.
Whereas primary life insurance policies provide financial coverage to your beneficiaries if you die, family riders pay funds to you if your spouse or children pass away. Though coverage is low, these small payouts can be used to cover medical costs, funeral expenses, and more.
Structure of benefits
While most rider policies are designed to pay out funds due to death, injury, or illness, other riders offer the ability to change the structure of how you receive benefits.