Life insurance tackles numerous needs at different stages of your life. With increased income and a higher standard of living, it becomes crucial to maintain the most suitable insurance protection for you and your family without being insurance-poor. To cut premium costs, get a rider at economical rates. Riders can provide several kinds of insurance protection if you meet their conditions.

What Is a Rider?

Riders are the additional benefits that can be bought and added to a basic insurance policy. These options allow you to increase or limit the insurance coverage of a policy. Buying a rider means paying extra for this supplementary benefit, but generally the additional premium is low because relatively little underwriting is required.

Insurance coverage, premium rates, terms and conditions of riders may differ from one insurer to another, and when a claim for the benefits of a rider is made, it may result in the termination of the rider, while the original policy continues to insure you.

Here are the most common life insurance riders:

1. Guaranteed Insurability Rider (a.k.a Renewal Provision)

This rider allows you to purchase additional insurance coverage in the stated period without the need for further medical examination. This rider is most beneficial when there has been a significant change in your life circumstances, such the birth of your child, marriage or an increase in your income. If your health declines with age, you will be able to apply for extra coverage without giving any evidence of insurability. This type of rider may also provide a renewal of your base policy at the end of its term without medical checkups. This rider may end at a certain age. 

2. Accidental Death or Double Indemnity Rider

This rider pays out an additional amount of death benefit if the insured dies as the result of an accident. Normally, the additional benefit paid out upon death due to accident is equivalent to the face amount of the original policy, which doubles the benefit. Therefore, upon death due to accidental bodily injury, the insured's family gets twice the amount of the policy. That's why this rider is called a double indemnity rider. Just make sure you understand the restrictions on this rider, as many insurance companies limit the meaning of the term "accident." If you are the sole income provider for your family, this rider is ideal for you because the double benefit will take good care of your surviving family's expenses in your absence.

3. Waiver of Premium Rider

Under this rider, future premiums are waived if the insured becomes permanently disabled or loses his or her income as a result of injury or illness prior to a specified age. Disability of the main breadwinner can have a crippling effect on a family. In these circumstances, this rider exempts the insured from paying the premium due on the base policy until he or she is ready to work again. This rider can be valuable, particularly when the premium on the policy is quite high. The definition of the term "totally disabled" may vary from one insurer to another, so be aware of the terms and conditions of your specific rider. (To learn more, see: Choosing the Best Disability Insurance.)

4. Family Income Benefit Rider

In case the insured dies, this rider will provide a steady flow of income to family members. When buying this rider, you need to determine the number of years your family is going to receive this benefit. The merit of having this rider is obvious: In case of death, the surviving family will face fewer financial difficulties thanks to the regular monthly income from the rider.

5. Accelerated Death Benefit Rider

Under an accelerated death benefit rider, an insured person can use the death benefits if he or she is diagnosed with a terminal illness that will considerably shorten the insured's lifespan. On average, insurers advance 25-40% of the death benefit of the base policy to the insured. Insurance companies may subtract the amount you receive, plus interest, from what your beneficiaries receive on your death. Most often a small premium or, in some cases, no premium, is charged for this rider. Insurers have different definitions of "terminal illness," so check what the rider covers before purchasing it.

6. Child Term Rider

This rider provides a death benefit in case a child dies before a specified age. After the child attains maturity, the term plan can be converted into permanent insurance with coverage up to five times the original amount without the need for medical exams. (For related reading, see: Protect Your Kids and Pets with Custom Insurance.)

7. Long-Term Care Rider

In the event the insured has to stay at a nursing home or receive home care, this rider offers monthly payments. Although long-term care insurance can be bought individually, insurance companies also offer riders that take care of your long-term care costs. (For related reading, see: A New Approach to Long-Term Care Insurance.)

8. Return of Premium Rider

Under this rider, you pay a marginal premium and at the end of the term, your premiums are returned to you in full. In the event of death, your beneficiaries will receive the paid premium amount. Insurers sell this rider with many variations so verify, the phrasing of the rider before you buy. (For related reading, see: Are Return of Premium Riders Worth It?)

The Bottom Line

Understanding the provisions of your insurance policy are your responsibility. Most insurers don't allow you to modify your insurance policy according to your individual needs, but riders empower you with much-needed control over coverage. Sit down with your insurance advisor to evaluate the benefits of riders and buy the one best fitted for you and your family.

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