Life Insurance Riders

This type of rider offers an additional cash benefit to your loved ones if you die because of an accident. In many cases, the payout amount is equal to the face amount of your policy – which means your family or loved ones end up with double the payout than if you had died of illness or natural causes. That’s why it’s sometimes called a double indemnity rider.

Some of the accidents that may be covered under your rider include:

• Car or traffic accidents
• Airplane crashes
• Falls
• Workplace incidents
• Fire-related injuries
• Firearm accidents

In some cases, an accidental death rider, or accidental death and dismemberment (AD&D) rider, may also cover major non-fatal injuries that prevent you from working. These can include limb loss; loss of hearing, eyesight, or speech; or partial or permanent paralysis. This type of coverage can provide critical protection to your family, especially if you work in a career where you’re more exposed to potential accidents.

Considering an accidental death benefit rider? Make sure that you know how your life insurance company defines accidents, since there might be limitations on when they are willing to pay. If your injury or death is related to suicide or happened while you were under the influence of drugs or alcohol, your rider may not cover you, either. You also might not qualify for coverage if you have hobbies like skydiving or mountain climbing or if you work in a high-risk job like law enforcement, firefighting or the military. 

Keep in mind that a rider is different from an accidental death benefit or ADB policy, which is standalone coverage you can buy separately from your life insurance policy. Our agents at eFinancial can help you compare your options to find the best fit for you.

The waiver of premium rider for disability allows you to stop paying your monthly premiums if you become permanently disabled and can’t work. 

With this rider, your insurer will waive all remaining premiums until you are ready to work again, while your coverage remains active. Once your disability ends, your payments start again. If you remain disabled for the length of your term insurance plan, you won’t have to make payments, but your coverage stays in place. 

A waiver of premium rider works well for people with a range of financial needs. Whether you run a business or are the main breadwinner in your family, these riders can help protect anyone who would be burdened financially by your lost income. This type of rider can be particularly helpful for high-value policies, which typically come with high premiums that can be tough to maintain after a job loss. 

While this benefit can be invaluable, it’s important to review the fine print before signing up. Here are some points to consider:

• Each company has its own definition of “disabled.” While some companies will honor your claim if you cannot return to your original occupation or line of work, others might specify that you don’t qualify if you’re still able to perform any type of work. If you are already disabled, you also won’t be able to qualify for this rider.
• Waiver of premium riders usually expire at a predetermined retirement age because they are only meant to provide a financial safety net during your working years. The expiration age ranges depending on the provider, but it’s typically anywhere between 60 and 70 years old. 
• The rider typically includes a waiting period before the benefit kicks in, so you’ll need to find a way to keep up with your premiums during that time. The waiting period can last anywhere from a few months to a year.

The inflation rider boosts your policy’s cash payout over time to account for inflation. Inflation riders are designed to adjust the dollar amount of your coverage to help you keep up with rising costs, such as medical care or housing. 

Generally, your death benefit will increase by a fixed percentage every year to address inflation and rising expenses. Increased coverage does mean a higher premium, but you can end up saving thousands of dollars on future care and end-of-life costs.

You can add these riders to current life insurance plans, such as term life policies. The types of inflation riders available will vary depending on your provider. The main types of riders available include:

• Guaranteed purchase option (GPO). You can buy the option to increase the amount of your coverage every two or three years during your term life plan, without having to get approved multiple times.
• Simple inflation protection. This rider increases your death benefit automatically every year by a percentage you choose with your insurer, usually 3% to 5%.
• Compound inflation protection. Like simple inflation protection, your coverage amount would increase by a percentage each year with this type of rider. The difference is that instead of a flat rate, your benefit goes up with compound interest, rather than rising by a flat amount each year.

Inflation riders can be expensive, so think about whether it’s better to pay extra for this rider or put those funds toward other financial priorities, like an emergency savings fund. The cost also depends on which type of rider you buy. A life insurance agent can walk you through your options to help you make the right choice. 

The terminal illness rider offers a cash payout for you or your loved ones if you are diagnosed with a terminal illness. This rider is often free with your policy or available at a fairly low cost. Also known as an accelerated benefit rider, it’s like a cash advance on your policy. In many cases, you can access a significant portion of your total death benefit, up to 75% in some cases.

These riders are different from critical illness riders, which cover you if you are diagnosed with a serious but curable condition or a chronic illness. Terminal illness insurance is specifically designed to offer your loved ones financial security once you are at the point where recovery is unlikely.

Just like the death benefit from your policy, your family can use this money for whatever they need. It can help defray the costs of your care, cover hospice or medical bills, or replace your income if you are no longer able to work. The funds don’t have to go toward care, though. You can even use the living benefit to pay for a vacation or anything that can help you enjoy your final days with your family and friends. 

If you pass away before your term ends, your beneficiary will still receive the remaining portion of your policy’s death benefit. You do not have to repay this money if you outlive your policy.

The living benefit rider provides a payout if you’re diagnosed with a critical or chronic illness or need to move to a nursing home. 

On average, nursing home care costs about $7,700 to $8,800 per month in the United States, and about 48% of adults receive some paid senior care over the course of their lifetime. A living benefit rider can give your family peace of mind and a way to cover these substantial costs if you end up needing this type of care. In some cases, the living benefit rider can also help pay for home health services.

Most living benefit riders will pay out benefits if you’ve been diagnosed with a critical illness, chronic illness, or terminal illness. They will need to see proof of your diagnosis before making the payment. In general, life insurance companies often determine that you meet the criteria for this rider when your primary care doctor feels that you are unable to complete two or three of the six activities of daily living: bathing, dressing, eating, toileting, walking, and continence. 

If you’re interested in this type of protection, talk to your life insurance agent about any rider options available with your plan. Many companies now include the living benefit rider at no additional cost to you.

If you’re a parent, the child rider provides a death benefit to you if your child passes away before a specific age. This money can provide a financial cushion to cover funeral, medical, or other expenses after a tragic loss. Typically, the payout is a few thousand dollars, and the rider itself is very inexpensive.

Beyond covering immediate needs after a loss, though, many people buy the child rider as a financial investment for their child. A child protection rider is typically term life insurance coverage that lasts until your child is between 22 and 30 years old, depending on the policy. Once your child reaches that age, they can often convert it to a permanent life insurance policy, with coverage up to five times the original amount and without the need for a medical exam. This is a great way to guarantee their insurability and make sure that they are covered once they become adults, even if they encounter health issues before then.

That depends on the amount of coverage you choose. Each rider is unique, and every provider has its own payout policies. Get in touch with our team at eFinancial to learn more about your options.

There are several things that affect how much you’ll pay for your life insurance riders. Some of these include:

• Your current health
• The amount of your cash payout (death benefit)
• Your term length, if you have term life insurance
• The type and number of riders you choose

You can find life insurance riders for both term and whole life policies. Keep in mind that each life insurance company offers different options, though. If you have a specific rider you want to add to a new term or permanent life policy, we’ll work to help you find the right provider. We can also help you add riders to your current life insurance plan.