Is an inflation rider a good idea?

An inflation rider can help you get the most out of your life insurance or long-term care insurance policy. While adding this rider will increase your premiums, it also increases your death benefit, which is valuable at any age. If you're younger and expect your family and income to grow, an inflation rider can help you gain the extra protection you need over time. If you're between 40 and 60, and retirement is still a few decades away, adding an inflation rider to your plan could be a great option to prepare financially. Talk to a life insurance agent about whether an inflation rider is right for you.

How expensive is an inflation rider?

It depends. The cost will vary based on the type of rider you choose, which policy you add it to, and how much your coverage increases over time. Compound inflation protection, for example, generally costs more than simple inflation protection. Adding an inflation rider increases your life insurance policy premium, but it also offsets inflated living and medical costs and end-of-life expenses during the life of your policy.

Inflation Riders

Gain peace of mind knowing that your benefits are protected, even as the value of your policy changes over time.

How Does Inflation Rider Life Insurance Work?

Everyone’s life insurance needs are unique. That’s why many providers offer life insurance riders, which are optional features you can add to your policy to help you customize your coverage.

Inflation riders are designed to adjust the dollar amount of your coverage to keep up with rising costs, such as medical care. 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 or long-term care (LTC) policies. The types of inflation riders available will vary, depending on your provider, but here are a few options you may have:

Guaranteed purchase option (GPO): You can buy the option to increase the amount of your coverage every two or three years for your term care insurance or 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 3-5%.
Compound inflation protection: Like simple inflation protection, your coverage amount would increase by a percentage each year. 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.

Benefits of Inflation Rider Life Insurance

Adding inflation protection is an easy and convenient option for many policyholders. With this rider, you get:

Financial protection

Financial protection
Future value

Future value
Peace of mind

Peace of mind