Rider

AAA

DEFINITION of 'Rider'

A provision of an insurance policy that is purchased separately from the basic policy and that provides additional benefits at additional cost. Standard policies usually leave little room for modification or customization, beyond choosing deductibles and coverage amounts. Riders help policyholders create insurance products that meet their specific needs.

INVESTOPEDIA EXPLAINS 'Rider'

For example, an accelerated death benefit rider on a life insurance policy would provide the insured with a payout while he or she was still alive, in the event of a terminal illness. The insured could use these funds to pay for medical expenses and to increase the quality of their remaining life. When the insured passes away, their beneficiaries will receive a reduced life insurance benefit, since the rider allowed a portion of the policy to be used early.

RELATED TERMS
  1. Vandalism Endorsement

    An optional type of coverage that can be added to a basic hazard ...
  2. Commutation

    The right that a beneficiary has to exchange one type of income ...
  3. Exoneration

    In a general sense, this term means to free from blame or guilt, ...
  4. Builders Risk Coverage Form

    An insurance policy that covers residential and commercial structures ...
  5. Term Life Insurance

    A policy with a set duration limit on the coverage period. Once ...
  6. Permanent Life Insurance

    An umbrella term for life insurance plans that do not expire ...
RELATED FAQS
  1. What is the difference between term and universal life insurance?

    Term life insurance is the most basic of insurance policies. It is nothing more than an insurance policy that provides protection ... Read Full Answer >>
  2. What level of reserve ratios is typical for an insurance company to protect against ...

    In the United States, and most developed nations, regulators impose required statutory capital reserve ratios on insurance ... Read Full Answer >>
  3. What risks do I face when investing in the insurance sector?

    Like all equity investments, insurance companies present investors with market risk. Insurance companies, like banks, also ... Read Full Answer >>
  4. What are the main factors that impact share prices in the insurance sector?

    The main factors that impact share prices in the insurance sector are interest rates, earnings and actuarial risk. In the ... Read Full Answer >>
  5. Why do insurance policies have deductibles?

    Insurance policies have deductibles for behavioral and financial reasons. Moral Hazards Deductibles mitigate the behavioral ... Read Full Answer >>
  6. Can I buy insurance to reduce unlimited liability in a partnership?

    Partnership insurance is actually quite common. Most of the time, partners buy insurance to safeguard against the possibility ... Read Full Answer >>
Related Articles
  1. Home & Auto

    Are Return-Of-Premium Riders Worth It?

    Find out if this policy coverage will add money to your pocket, or cost you in the long run.
  2. Insurance

    Living And Death Benefit Riders: How Do They Work?

    Find out how these different riders work, and which type is right for you.
  3. Insurance

    Protect Your Kids And Pets With Custom Insurance

    Find out how to protect those you love the most with specialized policies.
  4. Home & Auto

    Taking The Surprise Out Of Long-Term Care

    Don't be caught unprepared - find out what to look for in LTC insurance policies.
  5. Options & Futures

    The Disability Insurance Policy: Now In English

    Learn to translate this complicated policy so you can rest assured you're covered.
  6. Insurance

    Life Insurance: Putting A Price On Peace Of Mind

    Would your death leave loved ones financially stranded? Find out how to ease your mind and keep them protected.
  7. Options & Futures

    Variable Annuity Benefits: What The Fine Print Won't Tell You

    Learn the truth before you strap yourself into these annuity "seat belts".
  8. Options & Futures

    Let Life Insurance Riders Drive Your Coverage

    Find out how these additional benefits can help you customize your policy.
  9. Insurance

    How Does Cash-Value Life Insurance Work?

    Cash-value life insurance pays a beneficiary upon the death of the policyholder, and accumulates a cash value during the policyholder’s lifetime.
  10. Insurance

    Extreme Mortality Bonds: High Risk and High Reward

    Insurance companies issue extreme mortality bonds to cover their losses in the event of a large-scale disaster. Here's a look into these high-risk, high-reward bonds.

You May Also Like

Hot Definitions
  1. Hedging Transaction

    A type of transaction that limits investment risk with the use of derivatives, such as options and futures contracts. Hedging ...
  2. Bogey

    A buzzword that refers to a benchmark used to evaluate a fund's performance. The benchmark is an index that reflects the ...
  3. Xetra

    An all-electronic trading system based in Frankfurt, Germany. Launched in 1997 and operated by the Deutsche Börse, the Xetra ...
  4. Nuncupative Will

    A verbal will that must have two witnesses and can only deal with the distribution of personal property. A nuncupative will ...
  5. OsMA

    An abbreviation for Oscillator - Moving Average. OsMA is used in technical analysis to represent the variance between an ...
  6. Investopedia

    One of the best-known sources of financial information on the internet. Investopedia is a resource for investors, consumers ...
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!