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 >>
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

    Let Life Insurance Riders Drive Your Coverage

    Find out how these additional benefits can help you customize your policy.
  8. 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".
  9. Insurance

    Life Insurance: How Much Does Age Raise Your Rate?

    If you need life insurance, try to get it before your next birthday. Here's why.
  10. Insurance

    What Happens If Your Insurance Company Goes Bankrupt?

    When insurance companies go bankrupt or face financial difficulty, it's bad news for policy holders.

You May Also Like

Hot Definitions
  1. Asset Class

    A group of securities that exhibit similar characteristics, behave similarly in the marketplace, and are subject to the same ...
  2. Fiat Money

    Currency that a government has declared to be legal tender, but is not backed by a physical commodity. The value of fiat ...
  3. Interest Rate Risk

    The risk that an investment's value will change due to a change in the absolute level of interest rates, in the spread between ...
  4. Income Effect

    In the context of economic theory, the income effect is the change in an individual's or economy's income and how that change ...
  5. Price-To-Sales Ratio - PSR

    A valuation ratio that compares a company’s stock price to its revenues. The price-to-sales ratio is an indicator of the ...
  6. Hurdle Rate

    The minimum rate of return on a project or investment required by a manager or investor. In order to compensate for risk, ...
Trading Center