When you’ve figured out the basics of why you need life insurance, how much you need, and how long you need it for, there are still some details that you need to work out. One area consists of the policy add-ons we call riders. Riders offer policyholders more coverage options for an additional price and can help you customize your insurance policy to more accurately reflect your personal situation. Here are some of the most common riders that we see:
- Waiver of premium rider
This rider is a form of disability insurance that kicks in and covers your premiums in the event you become disabled and incapable of working. If you’re worried about how you would cover your bills in the event of an extended illness or injury, this type of rider can help you avoid a policy lapse. As always, details matter and the conditions of disability, expiration date, waiting periods, and other factors will vary between companies and policies.
- Guaranteed insurability (GI) rider
This type of rider guarantees you the right to buy additional life insurance coverage at a later date without going through a medical evaluation. Typically, you’ll have the option to purchase additional coverage at set intervals or milestone ages. Though details vary by company, this rider may be a good idea if you think you may need additional insurance later in life or are worried about how your medical history might affect your insurability.
- Accelerated death benefit (ADB) rider
In general, ADB riders allow the policyholder to receive a portion of their policy’s death benefit in advance of death upon receiving a diagnosis of certain terminal illnesses or admission into a nursing home. The conditions a policyholder would need to meet and the payout will vary by policy, but the amount usually exceeds the surrender value or the value of a policy loan.
While riders can offer you some extra reassurance, they come at additional costs that can boost your premium significantly. While the riders listed here are common, there are no one-size-fits-all solutions in insurance, and it’s a very good idea to speak with a qualified insurance expert who can help you compare policies and build one that suits your needs.