Riders are a common part of any life insurance policy. The most basic life insurance policy will provide your loved one with financial protection in the form of a death benefit.
In addition to the death benefit, you have policy riders, which allow you to further customize your policy by adding extra protection for yourself, your family, and your overall financial needs.
The small issue that comes with adding a policy rider to a life insurance policy is that there are several to choose from, making it very confusing to how each one works, which ones will be best to have, and which will be a complete waste of money.
So, what exactly is a policy rider?
The term rider means any change or addition to a legal contract. When that contract is a life insurance policy, a rider is an additional feature of your policy.
Riders are used to help you plan for events or circumstances that go beyond the scope of your policy. They include extra protection for things like illnesses, accidents, and early death. Riders increase the benefits and coverage of your policy.
However, that doesn’t mean every policyholder should get every available rider. Many policy riders will result in an additional cost to you. Other riders might be offered for free by your insurance company.
Adding a policy rider is an important financial choice, just like the details of your standard policy, such as the type of coverage you choose and the death benefit amount you require to protect your loved one.
It’s a good idea to consider each rider available to you carefully to see if it’s a feature worth adding to your life insurance policy.
| PROS of adding a Policy Rider | CONS of adding a Policy Rider |
|---|---|
| Can add additional coverage | May result in a higher premium |
| Can provide living benefits | Could be a waste of money if never used |
| Can secure future insurability | |
| Can provide financial protection from an illness | |
| Can provide financial protection from an injury | |
| Can provide coverage to an entire family |
Do all Life Insurance Companies Offer the Same Policy Riders?
No. The riders available to you depend on the insurance company you choose to apply for coverage with. The insurance companies choose which riders they will offer with their coverage.
Plus, not all riders are available in all states, and not all policyholders will qualify for all riders. Certain life insurance riders may only be available with a specific type of policy, coverage amount, or even limited up to a certain age.
One of the easiest ways to begin learning about the different types of life insurance riders is to group them into a few different can categories on how they work based on concerns and how the rider can offer a solution to your concern.
Living benefit riders – These are riders that help you plan for changes to your circumstances, such as getting sick or injured and unable to earn an income.
Financial planning riders – These are riders that help you plan for your financial future or protect against any financial hardship down the road.
Family protection riders – These are riders that allow you to add coverage for family members like your spouse and children.
Benefit structure riders – These riders allow you to change the structure of your life insurance coverage including the death benefit.
Knowing what types of riders you might want will also help you compare insurance policies. You can look for companies that offer the riders that will benefit you most at a rate that fits your budget.
We’ve detailed some of the most common life insurance riders below. Check them out to see what’s available and how it could help you.
| Concern | Solution |
|---|---|
| Immediate money if you become terminally ill | Accelerated death rider |
| Extra protection against an accidental death | Accidental death benefit rider |
| Securing your child's future insurability | Children's term insurance rider |
| Needed income due to a chronic illness | Chronic illness rider |
| Needed income due to a critical illness | Critical illness rider |
| Paying your bills if you become disabled | Disability income rider |
| Increasing coverage without proving insurability | Guaranteed insurability rider |
| Having a combination of term & permanent insurance | Level term rider |
| Paying for long-term care expenses | Long-term care rider |
| Getting your money back once your coverage ends | Return of premium rider |
| Life insurance for a spouse under one policy | Spouse term rider |
| Easily switching from term to permanent coverage | Term conversion rider |
| No out of pocket premium payments if sick or injured | Waiver of premium rider |
List of the Most Popular Life Insurance Riders & How They Work
Accelerated Death Benefit Rider
An accelerated death benefit rider is one of the most common life insurance riders available. Subject to state availability, most of today’s life insurance policies will include the rider at no additional charges.
Also referred to as the following:
- Accelerated Benefit Rider (ABR)
- Terminal illness rider
What does the rider do?
The accelerated death benefit rider provides early access to the death benefit of the life insurance policy should the insured become diagnosed with a qualifying terminal illness.
What’s a qualifying terminal illness?
Every insurance company has its own set of rules for what illnesses will allow you to use your accelerated death rider. Most guidelines are specific that the illness must be terminal in nature, with the insured having a life expectancy of 12-24 months from a licensed physician.
How much does the accelerated death benefit rider payout?
The amount of your benefit you can access will vary depending on the company but is a percentage of the total amount of the life insurance policy’s death benefit. That percentage amount can range from 50% up to 100% of the full death benefit and is paid in one lump sum payment.
Remember, that payout will come directly from the total death benefit of the actual life insurance policy. Any remaining portion of the death benefit would be paid out to the beneficiary when the insured has passed away.
Are there limitations to using the payout?
There are no limitations to how the money received from an accelerated death benefit payout must be used. The funds are paid to the insured and can be used for bills, living expenses, or any other way needed.
Is an accelerated death benefit rider worth it?
Since the accelerated death benefit is generally included with the life insurance coverage at no additional cost, it is worth accepting the rider. If a terminal illness does occur, you are not required to accelerate your death benefit.
Life Insurance Companies That Offer An Accelerated Death Benefit Rider
| Insurer | Terminal Illness Rider | Accelerated Death Benefit Amount | Qualification |
|---|---|---|---|
| AIG | Terminal Illness Rider | 50% of total death benefit | Terminal illness diagnosis with 24 months or fewer to live (12 months or fewer in New York) |
| ANICO | ABR for Terminal Illness | 100% of total death benefit | Terminal illness diagnosis with 12-24 months or fewer to live (depending on state definitions) |
| Assurity | Accelerated Benefit Rider | Up to $250,000 | Diagnosed with Terminal Illness |
| Banner Life | Accelerated Death Benefit | 75%, up to $500,000 | Diagnosed with Terminal Illness |
| Brighthouse | Acceleration of Death Benefit | Up to $250,000 | Terminal illness diagnosis with 12-24 months or fewer to live (depending on state laws) |
| Cincinnati Life | Accelerated Benefit Rider | 50%, up to $250,000 | Diagnosed with Terminal Illness |
| John Hancock | Accelerated Benefit Rider | 50%, up to $1,000,000 | Terminal illness diagnosis with 12 months or less to live |
| Lincoln Financial | Accelerated Benefit Rider | 50%, up to $250,000 | Terminal illness diagnosis with 6 months or less to live |
| Minnesota Life | Accelerated Death Benefit | Must maintain at least $10,000 in death benefit | Terminal illness diagnosis with 12 months or less to live |
| North American | Accelerated Death Benefit | 90%, up to $1,000,000 | Terminal illness diagnosis with 24 months or less to live |
| Pacific Life | Accelerated Death Benefit | 100%, up to $500,000 | Diagnosed with Terminal Illness |
| Principal | Accelerated Benefit | 75%, up to $1,000,000 of the death benefit | Diagnosed with Terminal Illness |
| Protective | Accelerated Death Benefit | 60%, up to $1,000,000 | Terminal illness diagnosis with 6 months or less to live |
| Prudential | Living Needs Benefit | 70%-100% of the death benefit | Terminal illness diagnosis with 6 months or less to live or organ transplant or permanent confinement to nursing home |
| Sagicor | Accelerated Benefit Rider | 50%, up to $300,000 | Diagnosed with Terminal illness or permanent confinement to nursing home |
| SBLI | Accelerated Death Benefit | 50%, up to $250,000 | Terminal illness diagnosis with 12 months or less to live |
| Transamerica | Accelerated Death Benefit | 100%, up to $1,000,000 | Terminal illness diagnosis with 12 months or less to live |
Accidental Death Benefit Rider
According to the CDC, accidental death is the third leading cause of all deaths in the United States. While a life insurance policy can provide financial protection to your loved ones for death related to health and accidents, adding the accidental death benefit rider adds an extra layer of protection, specifically from accidents.
How does an accidental death benefit rider work?
The accidental death benefit rider works by adding a second death benefit to the base coverage. Should death occur due to an accident, the life insurance company will pay the base death benefit plus the accidental death benefit.
For example, if your life insurance policy was valued at $500,000 and you added an accidental death rider of $250,000, your beneficiary would receive a total of 750,000 if an accident directly caused your death. If the death was not due to an accident, let’s say health-related, then your beneficiary would receive $500,000.
Does adding the accidental death benefit rider cost extra?
Adding an accidental death rider to a life insurance policy will cost extra. The price will vary, but in most cases, it will increase the premium by double.
What qualifies for an accidental payout?
It’s important to point out that companies only consider death accidental in specific circumstances. Not all sudden deaths will qualify as accidental death and receive the additional payout.
The rider is reserved for true accidents such as car wrecks, and the accident cannot have been caused due to a health-related condition such as a heart attack.
How much accidental death protection can be added to the base coverage?
The majority of accidental death benefit riders are capped to a maximum amount that cannot exceed the base coverage. Anything higher would need to purchase as an individual accidental death and dismemberment plan.
When can an accidental death benefit rider be added, and when does it end?
Adding the accidental death benefit rider will need to be done at the time of applying for coverage. The rider will last as long as the coverage remains active or when you have reached an age determined by the insurance company. This age is generally 60, 65, or 70.
Is an accidental death benefit rider worth it?
The accidental death benefit rider is a pass for us. When adding the rider, it nearly doubles the premium, and for it to pay, your death has to be caused by a true accident. If you’re willing to pay near double, why not just get double the death benefit and have it be able to pay for all death and not just accidents?
Life Insurance Companies that offer an accidental death benefit rider
| Insurer | Accidental Death Benefit Rider Amount |
|---|---|
| AIG | Up to $250,000 |
| Cincinnati Life | Up to $500,000 |
| Foresters Financial | Up to $300,000 |
| Protective | Up to $250,000 |
| Prudential | Up to $500,000 |
| Sagicor | Up to $250,000 |
| SBLI | Up to $250,000 |
| Transamerica | Up to $300,000 |
Children’s Term Insurance Rider
The children’s term rider (also commonly referred to as child insurance rider) provides temporary life insurance protection as an insured on a parent’s life insurance policy.
If the child passes away while the parent’s coverage is active, the rider will pay a death benefit to the insured parent.
Why would a parent need to purchase a children’s term rider?
Death is not a thought that anyone wants to think about but especially when it’s our children. The sad reality is that it can happen.
Adding a children’s term rider is a way to provide peace of mind in knowing that if the unthinkable were to occur, financial funds would be available to take care of medical expenses, funeral costs, or any other costs just as it would for an adult.
How much coverage can a parent purchase on their child?
Children insurance riders are offered in “units.” Every single unit is equal to $1,000 in death benefit protection. Most companies will allow parents to purchase up to 25 units, equivalent to $25,000 of coverage.
Will your child be required to take a medical exam?
Children are not required to take a medical exam, nor are they required to participate in the application process. Parents will be required to answer a few health questions about the child’s medical history, but never will an exam be required.
What happens if you have another child after the policy has been active?
The children’s term rider includes all “legal” children of the insured from newborns up to 18 years of age:
- Biological children
- Adopted children
- Stepchildren
Once a children’s term rider is purchased, it will automatically provide the same equal coverage to any additional children you have over the life of your policy without needing to make any changes.
So, let’s say you purchase the policy and add this rider when you only have one child. If you have two more children by a decade later, they’ll be automatically covered under the rider.
What happens to the child rider when my child becomes an adult?
Choosing to insure your child brings financial peace of mind. It can also provide peace of mind in securing their future insurability. Children can be covered under their parents’ policy as a rider until they reach age 25.
The majority of children’s term riders are convertible, meaning that when the child reaches 25, they will have the option to switch their term rider into their own policy. The adult child will not be required to take an exam or answer any health question.
The death benefit amount may also be increased up to five times the original amount received on the rider. For example, if the child was originally insured for $25,000, the adult child will be allowed to increase their new coverage to $250,000 without evidence of insurability.
Is the children’s term insurance rider worth it?
Absolutely. To add your child to your term insurance policy is such a low cost and provides excellent benefit. The coverage amount is not a lot, but children do not need a lot of insurance. Plus, when a child reaches 25, they can multiply the amount by 5x, giving them a higher amount of coverage to protect their own family.
Life Insurance Companies That Offer A Children's Term Insurance Rider
| Insurer | Minimum Benefit | Maximum Benefit | Conversion Option |
|---|---|---|---|
| AIG | 1/2 Unit ($500) | 25 Units ($25,000) | None |
| ANICO | 1 Unit ($1,000) | 25 Units ($25,000) | May be converted to permanent coverage at age 25 for up to 5x amount of rider to a maximum of $50,000. |
| Assurity | 1 Unit ($1,000) | 25 Units ($25,000) | May be converted to new coverage at age 25 for up to 5x amount of rider. |
| Banner Life | 5 Units ($5,000) | 10 Units ($10,000) | Coverage can be converted at age 25 |
| Cincinnati Life | 10 Units ($10,000) | 20 Units ($20,000) | Coverage can be converted at age 25 |
| Lincoln Financial | 1 Units ($1,000) | 15 Units ($15,000) | May be converted to new coverage at age 25 for up to 5x amount of rider. |
| Pacific Life | 10 Units ($10,000) | 20 Units ($20,000) if split between both parents | Coverage can be converted at age 25 |
| Principal | 5 Units ($5,000) | 25 Units ($25,000) | Coverage can be converted at age 25 |
| Protective | 1 Units ($1,000) | 25 Units ($25,000) | May be converted to permanent coverage at age 25 for up to 5x amount of rider. |
| Prudential | 10 Units ($10,000) | 100 Units ($100,000) | May be converted to new coverage at age 18 for up to 5x amount of rider. |
| Sagicor | 2 Units ($2,000) | 20 Units ($20,000) | May be converted to permanent coverage at age 25 for up to 5x amount of rider. |
| SBLI | 10 Units ($10,000) | 25 Units ($25,000) | May be converted to permanent coverage at age 25 for up to 5x amount of rider. |
| Transamerica | 1 Unit ($1,000) | 99 Units ($99,000) | May be converted to permanent coverage at age 25 for up to 5x amount of rider to a maximum of $50,000. |
Chronic Illness Benefit Rider
The chronic illness rider provides an acceleration of your life insurance death benefit if diagnosed with a chronic illness. The chronic illness rider has exploded over the last few years, with several life insurance companies offering the rider as either a free option and a paid option.
How does a chronic illness rider work?
A chronic illness rider is often referred to as a living benefit. For a long time, life insurance was viewed as an asset that could never be used while alive but provided valuable financial protection to your loved ones should you pass away.
However, that has greatly changed with the introduction of living benefit riders such as the chronic illness rider.
When your life insurance policy has this rider attached, it can provide a significant financial benefit if diagnosed with a chronic illness. The insurance company will pay a predetermined portion of the death benefit of the life insurance policy that can be used in any way needed.
What qualifies as a chronic illness?
For most chronic illness riders to work, the insured must be diagnosed by a licensed healthcare practitioner as being chronically ill and unable to perform two of the six daily activities of daily living (bathing, continence, dressing, eating, toileting, or transferring).
How much of the death benefit can be accelerated due to a chronic illness?
As mentioned, several companies offer a chronic illness rider, and the features, along with the potential benefit amounts, will vary depending on the rider.
For example, a chronic illness rider that costs an extra premium may have a more defined monthly benefit structure that will pay an income stream lasting until the entire death benefit has been exhausted.
Other benefit payout options (generally the free chronic illness riders) may offer a percentage of the death benefit in one single lump-sum payout.
Are there restrictions on how a benefit payment must be used?
A chronic illness benefit payment does not have restrictions on how you or your family chooses to use the money. It should also be noted that a benefit payout does not need to be paid back as it is deducted from the death benefit.
Any remaining death benefit will be paid out to the beneficiary should the insured pass away while the insurance policy is active.
Is the chronic illness benefit rider worth it?
The paid version of the chronic illness rider offers a structured benefit payout. Still, in our opinion, with so many companies offering it as a free option, we would opt to purchase one of those plans rather than paying an extra cost.
Life Insurance Companies That Offer A Chronic Illness Insurance Rider
| Insurer | Chronic Illness Rider | Qualification | Accelerated Benefit Amount | Rider Cost |
|---|---|---|---|---|
| AIG | Quality of Life (QoL) | Unable to perform 2 of 6 ADL's or needs "substantial supervision" due to cognitive impairment | Lesser of 100% of the death benefit or $2M | No Cost |
| AIG | Accelerated Access Solution Rider (AAS) | Unable to perform 2 of 6 ADL's or needs "substantial supervision" due to cognitive impairment | Min - 50% of death benefit; Max - 100% of death benefit up to $1.5M ($3M on select policies) Choice of 2%, 4% or HIPAA per diem (no per diem in CA) | Extra Cost |
| ANICO | Accelerated Benefit Rider | Unable to perform 2 of 6 ADL's or needs "substantial supervision" due to cognitive impairment | Lesser of 100% of death benefit or $2M for issue ages 0-65 & $1M for issue ages 66+ | No Cost |
| Assurity | Accelerated Benefits (Living Benefits) Rider | Beginning at age 65, requiring continuous confinement in a nursing home or under a written plan of home care for rest of life | Up to 50% of the net amount of insurance or 36 monthly payments of 2 of the net amount of insurance | No Cost |
| Brighthouse | Chronic & Terminal Care Rider | Unable to perform 2 of 6 ADL's or needs "substantial supervision" due to cognitive impairment | Up to 20% of the death benefit may be acclerated per calendar year. Lifetime payments are capped at the lesser of 75% of the death benefit or $2M. | No Cost |
| Cincinnati Life | Chronic Illness Rider | Diagnosed by a licensed health care practitioner as being chronically ill with the preceding 12 months | One advanced payment per calendar year. Minimum benefit that can be advanced is $10,000; Maximum lifetime benefit is the lesser of $1M or the policy death benefit minus $10,000 | Extra Cost |
| Lincoln Financial | LifeAssure Accelerated Benefits Rider | Unable to perform 2 of 6 ADL's or needs "substantial supervision" due to cognitive impairment | Min: $50,000 or 5% of original benefit amount discounted for early payment. Max: Annual IRS Per Diem or 25% of original benefit amount discounted for early payment Max Lifetime Benefit: Ages 20-69: $1.5M; Ages 70-80: $1M | No Cost |
| Lincoln Financial | LifeEnhance Accelerated Benefit Rider | Unable to perform 2 of 6 ADL's or needs "substantial supervision" due to cognitive impairment | Up to 100% of death benefit with payment option of: 1 - Monthly increments of lesser of 2% of gross DB or IRS per diem x days in month. 2 - one-time lump sum, discounted for mortality and interest | Extra Cost |
| Minnesota Life | Chronic Illness Agreement | Unable to perform 2 of 6 ADL's or needs "substantial supervision" due to cognitive impairment | The lesser of 2% or 4% of the CIA face amount or IRS per diem limit | Extra Cost |
| Mutual of Omaha | Living Benefit Riders | Unable to perform 2 of 6 ADL's or needs "substantial supervision" due to cognitive impairment | The max that can be accelerated in a single year is capped at the HIPAA per diem limit up to the max cumulative amount which is the lesser of $1M or 80% of the face amount at time of first acceleration request | No Cost |
| North American | Chronic Illness Accelerated Benefit Rider | Unable to perform 2 of 6 ADL's or needs "substantial supervision" due to cognitive impairment | Min amt of each election is lesser of 5% of DB on the initial election date or $75,000. Max amt at each election is lesser of 24% of DB on the initial election date or $240,000. Lifetime max is $1M | No Cost |
| Principal | Chronic Illness Death Benefit Advance Rider | Unable to perform 2 of 6 ADL's or needs "substantial supervision" due to cognitive impairment | Annual max is lesser of 25% of initial eligible amount or the annual per diem limit divided by reduction factor; the max lifetime accelerated benefit is the lesser of 75% of the initial eligible amount or $2M | No Cost |
| Protective | ExtendCare Rider | Unable to perform 2 of 6 ADL's or needs "substantial supervision" due to cognitive impairment | Monthly benefit must be between $3,000-$10,800; cannot exceed 5% of the base policy face amount. Lifetime max: 100% of death benefit up to $5M face amount | Extra Cost |
| Prudential | Living Needs Benefit | Confined to a nursing home for 6 months, terminally ill with 6-month life expectancy or organ transplant | Nursing home: 70%-80% of full face amount. Organ transplant: 90%-95% of full face amount; Terminal illness: 90%-95% of full face amount | No Cost |
| Prudential | BenefitAccess Rider | Unable to perform 2 of 6 ADL's or needs "substantial supervision" due to cognitive impairment | Choice of 2% or 4%. If choosing 4%, the maximum initial policy face amount is $500,000. If choosing 2%, the max initial policy face amount is $5M. Max Monthly Benefit is subject to IRS limits. (4% not available in all states) | Extra Cost |
| Sagicor | Accelerated Benefit Rider | Confined to a nursing home for 3 months, terminally ill with 12-month life expectancy or organ transplant | Nursing home: 50% of full face amount up to a maximum of $300,000. Terminal illness: 50% of full face amount up to a maximum of $300,000 | No Cost |
| Sagicor | Accelerated Benefit Rider Chronic Illness | Unable to perform 2 of 6 ADL's or needs "substantial supervision" due to cognitive impairment | Lesser of 25% of the death benefit or $400,000 maximum | No Cost |
| Transamerica | Living Benefits | Unable to perform 2 of 6 ADL's or needs "substantial supervision" due to cognitive impairment | Up to 24% of face amount annually. Lifetime max: Lesser of 90% of the face amount or $1.5M | No Cost |
Critical Illness Benefit Rider
The critical illness rider provides an acceleration of your life insurance death benefit if diagnosed with a critical illness. As with the chronic illness rider, the critical illness rider is another sought-after living benefit rider option available on many life insurance policies.
How does a critical illness rider work?
Critical illnesses are common and can end up being very costly for a family. With the critical illness rider, the insured will have the option to request acceleration of their death benefit to help pay for potential costs brought on by a critical illness.
What qualifies as a critical illness payout?
A qualifying critical illness payout will generally consist of the insured being diagnosed with any one of the following conditions:
- Heart attack
- Stroke
- Cancer
- End-stage renal failure
- ALS
- Major organ transplant
- Blindness
- Paralysis
How much of the death benefit can be accelerated due to a critical illness condition?
A critical illness claim will pay the insured a percentage of the total death benefit. Some riders specify the actual percentage amount based on the type of critical illness condition, while others will pay a flat-based percentage regardless of the type of critical illness.
Is the critical illness rider worth it?
Yes definitely. Any rider that can help supplement your primary health insurance plan is an excellent option to have, especially if it can help protect your family’s savings from a major health condition. 66% of all U.S. bankruptcies are tied to medical issues, as reported by the American Journal.
The great thing is that some of the best life insurance companies offer a combination of all three living benefit options (chronic, critical, and terminal illness) in one life insurance plan and no extra cost.
Life Insurance Companies That Offer A Critical Illness Insurance Rider
| Insurer | Critical Illness Rider | Qualification | Accelerated Benefit Amount | Rider Cost |
|---|---|---|---|---|
| AIG | Quality of Life (QoL) | Diagnosed with at least one of the following critical illnesses: Major Heart Attack, Coronary Artery Bypass, Stroke, Major Organ Transplant, End Stage Renal Failure, Paralysis, Coma, Severe Burn, Invasive Cancer, Certain Blood Cancers | Lesser of 100% of the death benefit or $2M | No Cost |
| ANICO | Accelerated Benefit Rider | Diagnosed with at least one of the following critical illnesses: Heart Attack, Stroke, Invasive Cancer, End-Stage Renal Failure, Major Organ Transplant, ALS, Blindness, Paralysis, Arterial Aneurysms, Central Nervous System Tumors, Major Multi-System Trauma, AIDS, Severe Organ Disease, Severe Central Nervous System Disease, Major Burns, Loss of Limbs | Lesser of 100% of death benefit or $2M for issue ages 0-65 & $1M for issue ages 66+ | No Cost |
| Assurity | Critical Illness Benefit Rider | Diagnosed with at least one of the following critical illnesses: Heart Attack, Major Organ Transplant, Stroke, Angioplasty, Kidney (Renal) Failure, Major Organ Transplant, Paralysis, Invasive Cancer, Carcinoma in situ | The amount payable is a percentage of the death benefit up to 100% of the full death benefit. | Extra Cost |
| Foresters | Accelerated Death Benefit Rider | Diagnosed with at least one of the following critical illnesses: Life Threatening (Invasive) Cancer, Myocardial Infarction, Stroke, Advanced Alzheimer's Disease, End Stage Renal Failure, Major Organ Failure, ALS | Lesser of a) 95% of the eligible death benefit on the effective date of the applicable each accelerated payment due to critical illness; and b) $500,000 | No Cost |
| John Hancock | Critical Illness Benefit Rider | Diagnosed with at least one of the following critical illnesses: Heart Attack, Stroke, Cancer, Coronary Artery Bypass Graft, Major Organ Failure, Kidney Failure or Paralysis | Choice of 10% or 25% of the policy death benefit amount. | Extra Cost |
| Lincoln Financial | Accelerated Benefits Rider with Critical Illness | Diagnosed with at least one of the following critical illnesses: Heart Attack, Stroke, Life-Threatening Cancer, End-Stage Renal Failure, Major Organ Transplant, Permanent Paralysis, Alzheimer's Disease | Lesser of 5% or $25,000 for critical illness | No Cost |
| Mutual of Omaha | Living Benefit Riders | Diagnosed with at least one of the following critical illnesses: ALS, Kidney Failure, Life-Threatening Cancer, Major Organ Failure, Heart Attack, Stroke, Dementia (including Alzheimer's), Major Burns, AIDS and Aortic Aneurysm Surgery | The maximum critical illness acceleration is 80 percent of the specified amount | No Cost |
| North American | Accelerated Death Benefit Endorsement | Diagnosed with at least one of the following critical illnesses: Heart Attack, Cancer, Stroke, Major Organ Transplant and Kidney Failure | Term lesser of 90% or $1,000,000; Permanent: Lesser of 25% or $50,000 with a maximum payout of $20,000 | No Cost |
| Transamerica | Living Benefits | Diagnosed with at least one of the following critical illnesses: Heart Attack, Stroke, Cancer, End Stage Renal Failure, ALS, Major Organ Transplant, Blindness or Paralysis | Lifetime max: Lesser of 90% of the face amount or $1.5M | No Cost |
Monthly Disability Income Rider
The monthly disability income rider or MDI for short provides financial protection should you become totally disabled and are unable to work. If you can no longer work in your occupation or any other occupation due to your disability, the rider will pay a monthly income stream while you recover.
Only a select few companies offer the monthly disability income rider at the moment, making it a highly desired rider for anyone looking for a combination of death benefit protection and disability insurance protection in one plan.
Does adding a monthly disability income rider cost extra?
Adding the monthly disability income rider will require an additional cost. The rider can only be added when applying for new coverage and not after the policy has been issued.
How much money can you receive from the rider per month?
Depending on the insurance company, monthly benefit amounts can range from $300 per month to $3,000 per month. Insurance companies that offer the option to add an MDI rider will also limit the monthly maximum amount to a percentage of the insured gross monthly income (60-66%) or a percentage of the total death benefit amount (1.5-2%).
How does the monthly disability income rider work?
If an insured is considered totally disabled either by illness or injury and unable to perform work, a claim may be submitted to the insurance company to begin the monthly disability income payout. The insured will be required to provide proof of total disability and wait a 90 day elimination period before monthly benefit payments will begin.
How long can you receive disability payments?
The monthly disability income rider will pay a monthly benefit for up to 24 months (2-years). Depending on the insurance company, the rider may terminate at an attained age (60 or 65).
Is the monthly disability income rider worth it?
An injury or sickness that would otherwise cause you to miss work and the ability to earn an income for your family could be financially devasting to any family. Adding the disability income rider is well worth the rider cost if you do not have a financial backup plan in the event of a long-term disability.
Life Insurance Companies that offer a monthly disability income rider
| Insurer | MDI Rider | Qualification | Benefit Amount | Benefit Period | Elimination Period |
|---|---|---|---|---|---|
| Assurity | Monthly Disability Income Rider | Total disability due to an injury or sickness that prevents the insured from working in their own occupation and requires a physician's care. | $300 - $3000 or 1.5 percent of base policy benefit amount. Also limited to a maximum of 60% of the applicant's gross earned monthly income. | 2 Years | 90 Days |
| Mutual of Omaha | Disability Income Rider | “Any Occupation” disability is defined as the Insured’s inability to substantially perform in the usual and customary way the essential duties of any occupation for which the Insured may qualify by reason of education, training or experience. | $250 - $3000 or 1.5 percent of base policy benefit amount. Also limited to a maximum of 60% of the applicant's gross earned monthly income. | 18 or 30 Months | 120 Days |
| Transamerica | Monthly Disability Income Rider | Total disability resulting in the inability to perform the substantial and material duties of the insureds regular occupation. | $300 - $2000 or 2 percent of base policy benefit amount. Also limited to a maximum of 66% of the applicant's gross earned monthly income. | 2 Years | 90 Days |
Guaranteed Insurability Rider
The guaranteed insurability rider provides the ability to add extra death benefit coverage in your later years. This type of rider is primarily found on both whole life and universal life insurance plans.
When you add a guaranteed insurability rider to a life insurance plan, you will be given the option to increase your life insurance coverage at future dates through purchasing additional coverage without providing evidence of insurability or the need for a medical exam.
When can a guaranteed insurability rider be used?
Life is unpredictable, and it can be hard to plan to have the correct amount of life insurance as those unpredictable changes occur. Sure, you can buy a new policy to meet changing life insurance needs, but what happens if you cannot qualify for new coverage due to a medical condition?
The guaranteed insurability rider protects against being uninsurable by offering the chance to purchase life insurance coverage at specific ages that the insurance company has set.
For example, adding the policy rider could offer the option to purchase additional coverage when the insured has reached the following ages, 22, 25, 28, 31, 34, 37, and 40.
Reaching a certain age is not the only time when extra death benefit coverage can be purchased. Many guaranteed insurability riders will also have an alternate option to purchase extra coverage based on special life events such as purchasing a new home, marriage, and birth or child adoption.
How much extra coverage can be purchased with a guaranteed insurability rider?
The total amount of additional life insurance protection purchased with the guaranteed insurability rider will vary depending on the company. In most cases, the maximum amount can be anywhere from $25,000 to $50,000.
You are not required to purchase the maximum amount, and it all at once. For example, you may decide to purchase $10,000 at age 28 and then another $15,000 at age 40. You can split the amount however you like.
It’s also important to know that you are not required to purchase additional coverage if you choose you do not need it.
Are there any limitations to using a guaranteed insurability rider?
Adding the guaranteed insurability rider does have a few limitations. As mentioned, the death benefit is limited to a maximum amount, and adding to the coverage can only be done at specific timeframes. While those are two of the largest limitations, there is one other, which has to do with your age.
Most guaranteed insurability riders can only be added to the coverage at the time of the application, and you must be between the ages of 18-36. The rider will also terminate at age 40, so it’s best to add it when you’re in your younger years.
Who will benefit the most from adding a guaranteed insurability rider?
The rider is ideal for anyone who is looking to protect their future insurability later in life. Even if you develop a health condition later in life, that would otherwise prevent you from getting new coverage.
For example, let’s say you bought a policy with a $500,000 benefit payout amount when you were 30 and in great health. If at 40 you’d been diagnosed with a heart condition but wanted to increase your benefit payout amount, this rider would allow you to do so without a medical exam.
Is the guaranteed insurability rider worth it?
The guaranteed insurability rider is a rider that you could pass on. For the extra cost in premium to have the rider, we can honestly say that the benefits are probably not worth paying an extra premium.
Life Insurance Companies that offer a guaranteed insurability rider
| Insurer | Issue Ages | Minimum Amount | Maximum Amount |
|---|---|---|---|
| ANICO | 0-38 | $10,000 | $50,000 |
| Assurity | 0-37 | $10,000 | $50,000 |
| Cincinnati Life | 0-37 | $10,000 | $25,000 |
| Foresters Financial | 0-37 | Lesser of face amount of $50,000 per option | |
| Mutual Of Omaha | 18-50 | $25,000 | $250,000 |
| North American | 0-35 | $5,000 | $25,000 |
| SBLI | 0-50 | $25,000 | $100,000 |
| Transamerica | 0-37 | $2,500 | $50,000 |
Level Term Rider
A level term rider is an add on to permanent life insurance policies such as universal life or whole life insurance. The rider allows an insured to combine both permanent life insurance coverage with term life insurance coverage under one single life insurance policy.
How does a level term rider work?
Having the option to add a level term rider can make for the perfect way structure your life insurance needs very accurately. Permanent life insurance offers many benefits such as potential cash value growth and coverage that will not expire.
The problem with permanent life insurance is that it can be costly especially if you have a high need for a large amount of coverage. Adding the level term rider can help reduce the cost of an expensive whole life insurance policy by shifting some of the death benefit to the level term rider.
For example, a young family with small children are likely going to require a larger amount of coverage in order to protect their families overall financial needs. While the ideal of buying a permanent life insurance may sound great, it’s not going to be the most cost effective option.
A more cost effective option would be to keep a smaller amount of coverage with the whole life insurance that will satisfy long-term financial needs and with the level term rider utilize the rider to carry the short-term financial needs.
How much coverage can be added as a level term rider?
The total death benefit that can be added to a level term rider will be a multiple of the death benefit on the whole life insurance coverage. Multiples can range from 4-10x the base coverage depending on the insurance company that is offering the policy rider.
How long does the level term rider last?
Adding the level term rider is like adding a regular term life insurance policy that has a contract length. Contract lengths can be anywhere from 10, 15, 20 or 30 years.
What happens when the level term rider ends?
Most level term riders offer a conversion options which allow for the term coverage to be switched to additional permanent covered if needed. There is generally an age cutoff of 65 or 70 as to when a conversion must be used.
Life Insurance Companies That Offer A Level Term Rider
| Insurer | Issue Ages | Benefit Amount | Contract Lengths | Conversion Option |
|---|---|---|---|---|
| ANICO | 18-70 | $25,000+ | 1, 10, 15, 20 & 30 Years | Yes |
| Assurity | 18-60 | $25,000+ | 10, 20 & 30 Years | Yes |
| SBLI | 18-60 | $50,000+ | 10, 15, 20, 25 & 30 Years | Yes |
Long-Term Care Rider
Adding a long-term care rider to a life insurance policy can help pay for expenses associated with long-term care costs, including in-home care, assisted living facility care, and nursing facility care. Many people think that these costs can be covered with their health insurance, but that’s not always the case.
Most health insurance plans will help with medical bills and short-term care expenses, but they are limited when it comes to long-term care costs. Even Medicare won’t cover the entire cost of long-term care.
According to the U.S. Department of Health and Human Services, someone turning age 65 has a 70% chance of needing some form of long-term care assistance throughout their remaining years.
How expensive will long-term care assistance cost?
Genworth has one of the best interactive long-term care cost calculators on the internet. Using data provided by their online calculator, we can view a breakdown of the national median average for long-term care services in 2020.
| In-Home Care | Community and Assisted Living | Nursing Home Facility |
|---|---|---|
| Homemaker Services = $53,024 | Adult Day Heath Care = $20,085 | Semi-Private Room = $92,860 |
| Home Health Aide = $54,203 | Assisted Living Facility = $50,070 | Private Room = $105,266 |
Based on the above numbers, it is evident that long-term care can be costly when services are needed, especially when health and medicare insurance does not cover the cost.
So how can you make sure these potential expenses do not come out of your pocket should the need occur?
Long-term care insurance is designed to handle these costs, and it can now be added to your life insurance coverage in the form of a policy rider.
How does the long-term care rider work when added to a life insurance policy?
The long-term care rider works in part with your life insurance death benefit. When you have an LTC rider attached to your life insurance policy and require financial assistance, the money to help pay for long-term care costs is pulled from the death benefit and paid directly to the insured. This is also known as an accelerated death benefit.
What qualifies as a long-term care benefit payout, and is there a waiting period?
Eligibility for a benefit payout will vary depending on the insurance company providing the rider. In most cases, the insured will need to be unable to perform two of the six activities of daily living (bathing, continence, dressing, eating, toileting, or transferring). The waiting or “elimination” period before a benefit can be paid is 90 days.
What’s the monthly long-term care benefit amount?
This will again depend on the company offering the rider. Most long-term care riders will determine a benefit that will be equal to the lesser of the following:
- 2%-4% of the long-term care specified amount
- Or the HIPPA per diem amount multiplied by the number of days in the calendar month
The monthly benefit can continue to pay up to 100% of the death benefit due to qualifying long-term care needs.
Can you purchase a long-term care rider on a term insurance policy?
The long-term care rider is only available on permanent life insurance plans and not commonly available with most companies.
How is the long-term care rider different from the chronic illness rider?
Both the long-term care rider and the chronic illness rider share similarities in that they both require an insured to be diagnosed as being unable to perform two of the six activities of daily living.
The greatest difference lies within the structure of the benefit payments. Long-term care payments generally have restrictions on how the benefit payment can be used, whereas chronic illness payments typically would not.
Long-term care claims would typically require you to provide a plan of care to the insurance company and documentation of how the benefit payments are being spent.
Chronic illness benefits payments are not as defined as the long-term care rider. Often with a chronic illness claim, the insurance company will review the claims and make a lumpsum payment based on a total percentage of the death benefit rather than continuous monthly payments.
Is adding the long-term care rider worth it?
If you know someone who has ever required long-term cares services then you probably have an excellent understanding of how much those services can add up and how much they can cost out of pocket without the proper insurance.
Adding the long-term care rider is a great option but keep in mind that it’s only offered on permanent plans which are more expensive than term insurance.
If permanent insurance is too costly, consider a term insurance policy that has a chronic illness rider which will be the next best option to the long-term care rider.
Life Insurance Companies That Offer A Long-Term Care Rider
| Insurer | Long-Term Care Rider | Qualification | Accelerated Benefit Amount | Rider Cost |
|---|---|---|---|---|
| Brighthouse | SmartCare Long-Term Care | A physician must certify that the Insured is chronically ill and unable to perform two of six activities of daily living (Bathing, Continence, Dressing, Eating, Toileting, and Transferring) or has a severe cognitive impairment. A care plan prescribed by a health care provider must be in place. | Up to 95% of the policy face amount can be accessed early for LTC expenses. It pays benefits for the first two years of a claim. Extension of Benefit Rider can add an additional 2-4 years of benefit payments. | Extra Cost |
| John Hancock | Long-Term Care Rider | Unable to perform 2 of 6 ADL's or needs "substantial supervision" due to cognitive impairment | 1%, 2% or 4% monthly acceleration percentage. Max monthly benefit - $50,000. | Extra Cost |
| Lincoln Financial | Care Coverage | Unable to perform 2 of 6 ADL's or needs "substantial supervision" due to cognitive impairment | 2% or 4% maximum monthly LTC benefit amount. LTC specified amount can be up to 100% of the policy death benefit. Company lifetime max amount is $2.5M for 2% and $1.25M for 4% option | Extra Cost |
| Lincoln Financial | LifeEnhance Accelerated Benefit Rider | Unable to perform 2 of 6 ADL's or needs "substantial supervision" due to cognitive impairment | Up to 100% of death benefit with payment option of: 1 - Monthly increments of lesser of 2% of gross DB or IRS per diem x days in month. 2 - one-time lump sum, discounted for mortality and interest | Extra Cost |
| MassMutual | LTCAccess Rider (LTCR) | Unable to perform 2 of 6 ADL's or needs "substantial supervision" due to cognitive impairment | Maximum Monthly Benefit amount for the rider is determined by choosing a Selected Benefit Period of 2, 3, 4, 5, 6 or 10 years. The Base Benefit Pool divided by the Selected Benefit Period (in months) equals the initial Maximum Monthly Benefit (MMB). The MMB is the most that the policyowner can accelerate as LTCR benefits in a given month. The minimum MMB is $3,000, and the maximum at issue is $30,000. | Extra Cost |
| Nationwide | Long-Term Care Rider | Unable to perform 2 of 6 ADL's or needs "substantial supervision" due to cognitive impairment | Monthly Benefit - 2%, 3% or 4% Max monthly benefit is lesser of elected monthly benefit percentage or 2x per diem limit. | Extra Cost |
| Transamerica | Long-Term Care Rider | Unable to perform 2 of 6 ADL's or needs "substantial supervision" due to cognitive impairment | Monthly benefit - Lesser of 2% of Death Benefit or HIPAA per diem. Lifetime max $1M | No Cost |
Return of Premium Rider
Adding the return of premium rider to a term life insurance policy will provide a refund of premium payments to the insured upon the termination of coverage.
How does a return of premium rider work?
The return of premium rider works along with the term insurance contract length you choose. If you purchase this rider (which is typically available only on contract lengths of 20 and 30 years) and continue to pay your required premiums, once the term insurance contract ends, the insurance company will send a lump sum payment equal to every premium payment paid throughout the duration of the contract.
What’s the catch? It sounds too good to be true?
It’s hard to believe that you can get all your money back from a life insurance policy, but you can with this rider.
The only potential drawback with the return of premium rider is that it will be more expensive than a regular term insurance policy without the rider.
In most cases, the cost of adding the return of premium rider can be as high as double or even triple the cost of a regular term insurance policy without the rider.
Is a return of premium rider the same as cash value life insurance?
Cash value life insurance is only associated with forms of permanent life insurance. Term life insurance does not have a cash value component and will not accumulate any cash value.
While term life insurance may not offer the ability to earn cash value growth, adding a return of premium rider can act like a savings account, creating the aspect of cash value.
Cash value within a permanent policy works based on interest rates and some cases, dividends. With a return of premium rider, you will not earn interest on your premium payments. That is how the insurance company makes money from the coverage.
Is a return of premium rider available with every company?
As you can imagine, an insurance company makes very little profit off this type of coverage, and therefore it is not available from most companies. At one point, at least a dozen companies offered a return of premium rider but have since dwindled to just a handful of companies currently offering the policy rider.
Can you get a return of premium rider with permanent life insurance?
As companies move away from offering the return of premium rider on their term insurance plans, we have begun to see it included on many permanent life insurance plans, specifically with guarantee universal life insurance.
Life Insurance Companies That Offer A Return Of Premium Term Rider
| Insurer | Rider | Issue Ages | Contract Lengths |
|---|---|---|---|
| Assurity | Endowment Benefit Rider | 18-60 | 20 & 30 Years |
| Cincinnati Life | Return of Premium | 18-60 | 20, 25 & 30 Years |
| Mutual Of Omaha | Return of Premium | 18-50 | 30 Years |
Spouse Term Rider
A spouse term rider is commonly associated with permanent life insurance policies but can also be found on a few term life insurance plans. Adding the rider allows the primary insured to add their spouse under their own life insurance plan to receive term life insurance coverage under one policy.
Also referred to as the following:
- Additional Insured Rider
- Other Insured Rider
What is the benefit of adding a spouse term rider?
The spouse term rider is similar to the children’s term insurance rider. Instead of having multiple insurance policies, the spouse rider, in addition to the child rider, can allow for your entire family to be covered under one life insurance policy, which many would consider being the largest benefit.
Another great benefit to adding a spouse as a rider to the main policy is the potential discount you can receive versus your spouse purchasing their own individual policy.
How much coverage can a spouse receive as a spouse rider?
There is generally no limit to the amount of coverage a spouse can receive as long as the death benefit amount meets financial justification guidelines.
How long does a spouse term rider last?
A spouse term rider provides level premium term life insurance under the primary insured’s policy. The spouse term rider contract length cannot be greater contract length than the primary insureds contract length.
What happens once the spouse term rider ends?
At the end of the contract length, the rider will expire, and the spouse’s coverage will terminate. The majority of spouse term riders will offer a conversion option that allows for the rider’s coverage to be exchanged to an individually owned permanent life insurance policy.
Will your spouse be required to take a medical exam?
Medical exams are a large part of the traditional process for getting life insurance coverage. Adding a spouse to an insurance policy may require them to take a medical exam.
However, plenty of companies offer no medical exam coverage, which can also apply to the spouse. Bottom line, it all depends on the insurance company.
What are the potential negatives of a spouse term rider?
There is not a lot to dislike about the spouse term rider. The one significant negative would be if both spouses ended up divorcing. While the spouse rider can convert their term coverage, it can be expensive considering they would be required to switch from term to whole life insurance.
Life Insurance Companies That Offer A Spouse Term Rider
| Insurer | Issue Ages | Benefit Amount | Contract Lengths | Conversion Option |
|---|---|---|---|---|
| Assurity | 18-75 | $25,000+ | 10, 15, 20 & 30 Years | Yes |
| Mutual of Omaha | 18-80 | Must match the primary insureds term benefit amount and contract length. | Yes | |
Term Conversion Rider
A term conversion rider allows you to exchange your existing term life insurance plan for a permanent life insurance policy without evidence of insurability. This rider is commonly included on all term life insurance plans at no additional cost.
How does a term conversion rider work?
A term conversion allows for a policyholder of a term insurance policy to exchange their term coverage into a permanent insurance plan offered by the insurance company.
The request generally requires a simple conversion exchange form and does not require the insured to take a medical exam, answer medical questions, or provide evidence of insurability.
When can a term conversion rider be used?
Every company will have its own set of guidelines when it comes to converting a term insurance policy. Most will allow for the coverage to be converted anytime during the contract length and before reaching age 70.
What are the benefits of a term conversion rider?
The conversion rider is a free policy rider and is completely optional as to whether or not an insured chooses to exchange their term insurance plan for a permanent plan.
The conversion option will often provide the greatest benefit to an insured with a health change that would likely cause a decline for new coverage. When converting coverage, you will be able to keep your originally approved health classification.
Why is this beneficial?
Let’s say your original term insurance policy was approved at the best health classification. Four years into your coverage, you have a health change that would prevent you from getting that same health classification. When you convert, you’re allowed to transfer over the health classification from your term policy, which will result in a lower rate.
How much coverage can you get with a term conversion rider?
Converting an existing term insurance policy allows you to convert either the full amount of the current coverage or a portion of the coverage. Increasing the coverage is not allowed as that would require full underwriting.
What will happen to your premium if you use the term conversion rider?
If you choose to use the term conversion option, you will be switching from term insurance to a permanent life insurance plan, which will result in a higher premium.
Life Insurance Companies That Offer A Conversion Rider
| Insurer | Conversion Rule |
|---|---|
| AIG | Convertible feature extends to the earlier of the end of the level-premium period or the insured's attainment of age 70. |
| ANICO | Conversion is available to the end of the level period (10-year, 15-year, 20-year or 30-year) but not beyond the policy anniversary on which the Insured reaches attained age 65. |
| Assurity | Conversion period begins on issue date and ends on the earlier of: one year prior to the end of level term period for 10-year plan; or, two years prior to the end of level term period on 15-, 20- and 30-year plans; or, policy anniversary on which the insured attains age 65. |
| Banner | Convertible for the duration of the guaranteed level premium period or up to attained age 70, whichever comes first. Policies issued at age 66 or over are convertible during the first five policy years. |
| Cincinnati Life | Convertible to an eligible permanent insurance product at the end of the guaranteed term period or the policy anniversary following the insured’s 70th birthday. |
| Foresters Financial | Can convert the base face amount to a new permanent life insurance certificate during the conversion period without having to provide evidence of insurability. Conversion must be elected prior to the earlier of the end of the initial term period less five (5) years, or the anniversary on which the insured is age 65. |
| John Hancock | Conversion period is the lesser of end of the level period or attainment of age 70. |
| Lincoln Financial | The conversion period is equal to the earlier of the level term period or before client’s attained age 70. |
| Minnesota Life | 10 & 15 year plans are convertible in the first five policy years. 20 & 30 year plans are convertible in the first 10 years. Coverage cannot be converted when over the age of 75. |
| Mutual of Omaha | Coverage is convertible to a permanent life policy that is made available for conversions at the time. |
| North American | Conversion is allowed during the level premium period of the policy, or to age 75. |
| Pacific Life | Conversion period is the lesser of end of the level period or attainment of age 70. |
| Principal | Allows the policy owner to convert to a permanent policy based on the earlier of the conversion period (10YT: first seven policy years; 15YT: first 12 policy years; 20YT: first 15 policy years; 30YT: first 20 policy years) or the policy anniversary nearest insured’s attained age 70. |
| Protective | Full and partial conversions allowed up to age 70 or to the end of the level term period minus two years, whichever occurs first. |
| Prudential | Convertible to the lesser of the level-premium period of to the first policy anniversary on or after the insured's 65th birthday. |
| Sagicor | Conversion may occur at any time prior to the policy anniversary following the insured’s 70th birthday. |
| SBLI | Conversion may be converted to a whole life or conversion universal life policy on any premium due date which is the earlier of age 70 or end of the level term period. |
| Transamerica | This option must be exercised before the earlier of the end of the initial level premium period or the insured’s 70th birthday (75th birthday for Preferred Plus class). |
Waiver of Premium Rider
If you’re disabled and unable to work, a waiver of premium rider can cover the cost of your life insurance premiums. This rider allows you to stop paying your premiums without losing your policy.
How does the waiver of premium rider work?
Adding the waiver of premium rider to your policy will keep your life insurance coverage from terminating due to an illness or injury that would prevent you from being able to work and paying your premium payments.
Unlike a monthly disability income rider, you won’t receive a direct payout from this rider. Instead, the insurance company will waive premium payments for a period of time so that you can keep your life insurance coverage.
How long with premium payments be waived?
Before premium payments can be waived, the insurance company will require a waiting period of 4-6 months, depending on the insurance company in which the disability must continue uninterrupted.
After the waiting period has been met, and the disability continues to prevent the insured from working in their own occupation, premium payments will be waived for the entire duration of the disability.
NOTE: If adding a waiver of premium rider, check to see if there is a termination age. Many companies will continue to waive premium payments for the entire duration of the disability but up to a certain age, which tends to be age 65.
Is there an age cutoff for adding the waiver of premium rider?
The waiver of premium rider generally has an age cutoff anywhere from age 55 to 65 in which the rider cannot be added to the coverage.
Life Insurance Companies That Offer A Waiver Of Premium Rider
| Insurer | Elimination Period | Rider Termination |
|---|---|---|
| AIG | 6 Months | Age 65 |
| ANICO | NA | Age 65 |
| Assurity | 6 Months | Age 65 |
| Banner | 6 Months | Age 65 |
| Cincinnati Life | 4 Months | Age 65 |
| Foresters Financial | 6 Months | Age 65 |
| John Hancock | 6 Months | Age 65 |
| Lincoln Financial | 4 Months | Age 65 |
| Minnesota Life | 6 Months | Age 65 |
| Mutual of Omaha | 3 Months | Age 60 |
| North American | 6 Months | Age 65 |
| Pacific Life | 6 Months | Age 65 |
| Principal | NA | Age 65 |
| Protective | 6 Months | Age 65 |
| Prudential | 6 Months | Age 65 |
| Sagicor | NA | Age 60 |
| SBLI | 6 Months | Age 65 |
| Transamerica | 6 Months | Age 60 |
Term Riders vs. Whole Life Riders
The majority of the policy riders can be added to any type of life insurance policy. Others can only be added to specific policy types such as whole life insurance.
For example, you can’t add a return of premium rider or a term conversion rider to a whole life policy.
Similarly, guaranteed insurability riders are a lot more common with whole life policies. The availability of most other rider types will depend on the company itself.
The below chart will help you identify if a certain rider can be added specifically to term life insurance, whole life insurance, or both.
| Policy Rider | Term Life Insurance | Permanent Life Insurance |
|---|---|---|
| Accelerated Death Benefit Rider | X | X |
| Accidental Death Benefit Rider | X | X |
| Children's Term Insurance Rider | X | X |
| Chronic Illness Rider | X | X |
| Critical Illness Rider | X | X |
| Disability Income Rider | X | |
| Guaranteed Insurability Rider | X | |
| Level Term Rider | X | |
| Long-Term Care Rider | X | |
| Return of Premium Term Rider | X | |
| Spouse Term Rider | X | |
| Term Conversion Rider | X | |
| Waiver of Premium Rider | X | X |
Breaking Down the Cost of Riders
The cost of riders will depend on the rider itself. Some riders are free or offered at a very low cost. Others can contribute hundreds of dollars a year to your policy. Reference the below table:
| Policy Rider | Expense |
|---|---|
| Accelerated Death Benefit Rider | Low |
| Accidental Death Benefit Rider | Moderate |
| Children's Term Insurance Rider | Low |
| Chronic Illness Rider | High* |
| Critical Illness Rider | High* |
| Disability Income Rider | High |
| Guaranteed Insurability Rider | Moderate |
| Level Term Rider | Moderate |
| Long-Term Care Rider | High |
| Return of Premium Term Rider | High |
| Spouse Term Rider | Moderate |
| Term Conversion Rider | Low |
| Waiver of Premium Rider | Low |
*Assuming the rider is being offered as a paid option. Several companies offer both the chronic and critical illness riders as a free option as well.
Are Life Insurance Riders Worth the Cost?
Whether or not a rider is worth it depends on your needs and financial situation. While riders can add to your policy cost, they can also save you a lot of money in the long run if you ever need to use them.
Your insurance company should let you see the cost of any rider before you add it. You can weigh the cost of adding the rider against its overall value to you and your family to make a well-informed decision.
You can also compare the value of riders categorized as “family riders,” such as the spouse term rider and children’s term rider, to see if there is a greater value in insuring an entire family under one plan or purchasing individual policies for each family member.
The same might be true for other riders classified as “living benefits.” Take a long-term care rider, for example. In some cases, a long-term care rider could significantly offset the cost of long-term care.
However, long-term care insurance is also purchased as its own insurance plan and can often offer more coverage than what it can as a life insurance rider.
So it can be a good idea to compare what a standalone policy would provide and cost versus adding it as a rider to a life insurance plan. For some, it may not be worth adding it as a rider but worth the cost of purchasing an actual long-term care policy.
Adding and Removing Riders from Your Policy
You can add riders to your policy at the time of purchase. Generally, you’ll be able to see your options when you’re applying. You can select the riders you want before your policy is finalized.
Some insurance companies will let you add riders later into the policy years. However, most companies will ask you to fill out a new application and take another medical exam.
For example, if you want to add an accelerated death rider later on, the insurance company will want to know how risky offering you the rider is. So, they’ll need to get a complete picture of your health again.
Removing riders is easier and can be done at any time with most companies. It’s often as simple as filling out a form. The rider will be removed from your policy, and your price will be adjusted to reflect the change.
In some cases your riders might expire automatically. This can happen when your children age out of eligibility for a child rider. It can also happen when a divorce makes your spousal rider void. Check the fine print of any riders you add to your policy to see if there is anything you need to know about removing them later.
Life Insurance Riders - Final Word
Life insurance riders can help you build a life insurance policy that meets your family’s financial needs. Riders can also increase the overall value of your life insurance policy and offer an increase in coverage for your family.
They can protect you in event of life changes or financial emergencies. Some riders are free or inexpensive, while others can be very costly.
No matter what kind of policy you’re looking for, we have options to show you. From policies with multiple rider options to simple, low-cost policies No Medical Exam Quotes can show you quotes that will meet your needs.
If you’re ready to get started, we’re ready to help.
