Speak with an experienced advisor! Term Life Insurance Riders
Term life insurance riders enable life insurance policies to be built that can do more than provide a death benefit. Understanding life insurance riders and what they add to policy is the key to constructing a policy that provides more than just a death benefit.
These extra benefits targeted to specific needs add additional protection making the policy behave in a certain way in threatening situations. Depending on the life insurance company, some riders are automatically built into the policy, while others may require an additional premium to add to your policy.
Riders add an extra layer of protection to a life insurance policy and merit some extra attention by the buyer. During the life of the policy, the additional riders can be removed from the policy if no longer needed. Removing them will result in lowering the insurance premium. Not all riders are available with every insurance company nor every type of life insurance and are not available in all states.
Waiver of Premium Rider
A waiver of premium rider keeps your policy and riders in force by waiving the premiums if you become completely disabled.
Accidental Death Benefit
This rider will pay your beneficiaries an additional death benefit if your death is accidental as defined in the rider. You can choose amounts up the face amount of the policy doubling the death benefit. You might even benefit from a “stand-alone” accidental death policy, which is usually very inexpensive.
Living benefit rider
Although not available with e
very company, some companies build this benefit into the policy automatically. For no additional premium, this valuable rider enables you to receive part of the policy death benefit. At the same time, while you are alive and become terminally ill, you are confined to an eligible nursing home, or need a vital organ transplant and meet specific criteria. You should also consider buying a “stand-alone” critical illness policy, separate from your life insurance policy designed specifically for this purpose for additional coverage.
Child Protection Rider
You can provide temporary insurance protection for your eligible children with this rider. It offers a level death benefit and includes the option to convert to any permanent policy provided for up to five-time the rider’s face amount, without evidence of insurability. The opportunity to convert the policy can be exercised at specified times until a child reaches age 25. This rider is available for an additional premium and covers all qualified children in the family. It is available in an amount from $5,000 up to $25,000.
Other Insured riders
Provides term life insurance on your spouse, a business partner, or another person with an insurable interest.
Critical Illness Rider
Wouldn’t you rather receive a check than a get-well card? This benefit would pay you a check from $50,000 to $100,
000 if you were stricken with a heart attack, stroke, cancer, or a severe illness. It pays a lump-sum benefit if the insured is diagnosed with a specified critical illness. With some policies, the use of this benefit does not decrease the death benefit amount but is paid in addition to the death benefit.
And with select companies with a first-ever diagnosis, you are still eligible for benefits from multiple critical illness categories if you continue paying premiums. This rider may also available on the other insured covered by the policy. You should also consider purchasing a stand-alone critical illness policy.
Return of Premium Rider
Another valuable term life insurance rider is a money-back option to refund some of the premiums or all the premiums paid into the policy if you live beyond the initial term period. It is available only on 20 year and 30-year plans. For example, if you pay $1,000 per year into polic
y and are still living after 20 years has passed, the company will return to you the $20,000 spent on your insurance. Although it seems like this rider is something everyone would choose to add to their policy, it can be costly, especially if the insured is over 40 years of age.
So essentially, the policy has covered you for the term issued and gives you the money back at the end of that term, costing you nothing for the time you were covered. With some companies depending on the policy, your return of premium may be prorated.
How this works is, if you keep your 20-year policy for 15 years and want to cancel, you would receive 50% of your premiums paid into the policy. With some companies, if you pay for 19 years, then stop, you still won’t be eligible for any return, and you lose the premiums you paid for the 19 years. You would have to keep it for the full 20-year term to receive your premium refund.
Disability Income Rider
Disability doesn’t just 
happen to someone else. Studies show that 43 percent of all people age 40 will have a long-term disability event before age 65. Disability income riders pay a monthly income benefit to make mortgage payments and other bills. The benefit covers a disability resulting from either sickness or accident.
Sometime a company will offer a monthly disability income or an accident only disability income benefit rider. If you only select the accidental only disability option, this would lower your policy cost. But would only be covered from a disability resulting from an accident.
The pay period can be short term or long term, depending on the company and the policy. The short term is usually 2-2 1/2 years. To qualify for the disability, you must not be able to perform the activities of your “own” occupation. Some of these riders only allow you to be eligible for benefits if you cannot perform any job you qualify for, making it harder to receive the benefit of having the rider. You would have to be totally disabled.
Terminal illness and Accelerated benefits
One valuable term life insurance rider that is included with most policies is either a Terminal Illness or Accelerated benefit provision built into the policy. Terminal illness is defined as being diagnosed with a life expectancy of 12 months or less in some cases, 24 months.
You may receive from 50% to 100% of the death benefit depending on the company. Accelerated benefits allow you to receive an advance payment of the death benefit if you are diagnosed with a terminal illness or require permanent care in a nursing facility. This is not available in all states.
Term Insurance Rider
This rider enables the insured to add additional term coverage to the primary insured’s policy. Let’s say a person wants coverage for $1,000,000 for 20 years and another $1,000,000 for only ten years. Total insurance coverage would be $2,000,000. Instead of purchasing two separate policies, the insured could add an additional rider for $1,000,000 on the 20-year $1,000,000 term plan. The total coverage would be $2,000,000 for the first 20 years. After ten years pass, the additional rider would fall off the policy, and the coverage would continue at $1,000,000 for another ten years, the remainder of the term policy period.
Term Conversion Rider
A term conversion rider allows you to convert some or all the original death benefit into a different product. Conversions can be turn
ed into universal life or whole life insurance products depending on the company and what it will offer at the time of the conversion. Some companies only offer one alternative; others offer five possibilities. You are usually required to convert during a specific time frame; it is different with each insurance company.
Some may require conversion during the first ten years you have your term policy. Others will let you convert at the end of the term. When you convert the policy, it will be at your ‘attained age’ or current age. So, if the policy was issued at age 35 and ten years have passed, the new premiums will be based on your new age of 45.
Guaranteed Insurability Rider
The rider offers the chance to continue life insurance coverage without having to prove you are insurable to the insurance company again. You would not be required to complete a medical exam or provide physician statements of a change in your health to convert your policy to a permanent policy during or after the initial term period.
Use An Independent Agency Not a Captive Agent
A captive agent must offer you products from the company that has “captured” and contracted them to solicit insurance. A captive agent limits your choices of finding the best company at the best price, with the quickest turn around time. Also, be aware of many of the larger agencies that continuously advertise on the radio which in reality only represent a handful of companies
The key to finding the best life insurance quotes is to use an agency that represents multiple carriers. We work with the top-rated best life insurance companies. Many of these companies use the accelerated underwriting process eliminating a medical exam and speeding up policy issue. Let us put our expertise to work for you.
