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Customizing Your Insurance Policy with Riders

Life insurance can be a powerful tool when the unthinkable happens in your family’s life. When you pass on, it’s important to have a plan in place to prepare financially, especially if you are a primary breadwinner or main support in your family. There’s power in knowing the answers to questions around how you might pay for college, keep your mortgage current, or finance other expenses that need to go on after you or your loved one has passed.  While life insurance can be a great start in finding protection for your family, there are additional ways to enhance your policy. One way is through riders.
 
 

What Are Insurance Riders?

 
Riders are add-on products that the insured can select for their existing policy. They offer additional benefits to your policy, such as covering your underage children, providing extra benefits while you’re hospitalized, or returning your premiums to you after you’ve reached the end of the policy term. Different riders have different costs, and the availability and terms of different life insurance riders varies based on your insurer.1
 
Riders add benefits to your life insurance policy they offer extra protection for the insured and others potentially covered under the rider, in addition to the protection you receive from the policy itself.
 

Types of Common Insurance Riders

 
Again, several types of riders may be available to add to your life insurance policy, but here are some common ones to consider.
  • Critical Illness Riders

    Critical illness riders in general offer a lump sum of money to the insured if you are diagnosed with a critical illness. Which critical illnesses qualify are determined by your insurer’s terms, but in many cases these riders cover things like certain cancers, heart attack, or stroke. These riders are made to help provide support during the treatment of the covered illness, rather than reimbursement for specific medical bills.

  • Return of Premium Riders

    A return of premium rider gives back the money you’ve paid in premiums if you live to the end of your policy term. This specifically benefits those with term life policies, and the money you receive from your return of premium rider is usually tax-free.2 Return of premium riders may also return premiums for a death during contestability period, or a death that isn’t covered.

  • Child Life Insurance Riders

    A child life rider adds your child/or and any other children you might have after enrolling in your policy to the rider, offering them life insurance coverage up to a certain age. The age of coverage termination varies from policy to policy, as do terms regarding medical qualification of your children. It’s important to note that most child life riders are able to be converted into an individual policy for the child once they reach a certain age.

Not all riders are created equal, meaning that the rules for qualifying and when you can add a rider to your policy may vary from insurer to insurer.

Insurance Rider Considerations

 
Not all riders are created equal, meaning that the rules for qualifying and when you can add a rider to your policy may vary from insurer to insurer. For instance, with child life riders, generally any additional children that you add after the rider is in place will be added automatically, but the first children you add to the rider may have to undergo a medical qualification process. Additionally, if you become sick and use a critical illness rider benefit, your final death benefit may be reduced by the amount you received while living.1
 
Before you make a decision about adding to your life insurance policy, it’s a good idea to check with your life insurance agent and/or your financial advisor to see what types of policy additions may be right for you and your situation.