Life Insurance Policy Riders

Due in large part to the need for creative protection solutions, a number of specialized life insurance policy riders have been designed to apply coverage where additional financial protection may be needed by a policy holder. Life insurance policy riders can provide policy holders with additional benefits, as well as increase peace of mind that if something happens, there will still be an adequate amount of coverage.

Disability Income

With the disability income rider attached to a life insurance policy, the policy holder can collect a regular income from the insurance company if they become disabled and cannot work. The policy will specify the amount of the income and whether it is paid for a certain amount of time or for the total length of the individual’s disability.

It is important to note that some disability income riders will pay out only if the policy holder becomes disabled as a result of an accident, while others will pay for an insured’s disability due to either an accident or an illness.

Term Conversion Rider

Term life insurance provides coverage for a certain period of time such as 15 or 20 years. Permanent life insurance, such as whole life or universal life, will provide coverage throughout one’s entire life (provided that the premiums are paid).

By obtaining a term conversion rider, the policy holder of a term life policy will be able to convert the term policy into permanent coverage without the need to undergo a medical exam to prove his or her insurability.

This type of coverage option can be especially attractive for those who are just starting out in their careers or families and who need life insurance coverage but don’t have enough funds to secure all of their coverage with a permanent life insurance plan. In most cases, there will be a deadline for when the policy holder must convert their term policy over to a permanent plan.

Accelerated Death Benefit Rider

The accelerated death benefit rider lets the insured collect a portion of the policy’s death benefit if he or she becomes terminally ill and has a short life expectancy, such as one year or less.

The insurance policy will typically spell out exactly how much of the death benefit will be available before death. The proceeds that are received can be used for anything that the insured sees fit, such as medical bills or living expenses.

Oftentimes the accelerated death benefit is automatically included on certain types of life insurance policies for free or for just a small amount of additional premium payment. In addition, there may be a fee charged to the insured for exercising this option.

Return of Premium Rider

If the insured lives to the end of a policy’s “term,” then he or she will receive all of their money back if they have the return of premium rider. This rider usually requires an additional amount of premium to be paid in for the privilege of obtaining funds back, should the insured live through to the end of the policy’s time period.

Child Protection Rider

While nobody wants to think about losing a child, the child protection rider can provide financial help to those who find themselves in this difficult situation. Even though the death of a child will not typically result in an income loss, the tragedy would still have certain financial consequences – which could essentially pose additional financial hardship on the family.

The child protection rider provides term life insurance benefits that can be used for final expenses in the event that a child passes away. With these riders, basic information about the child’s health is typically required for underwriting purposes.

Critical Illness Rider

With the critical illness rider, the insurer will pay the insured a lump sum of cash if they are diagnosed with one of the critical illnesses that are specified in the insurance policy. Typically, such illnesses will include heart attack, cancer, stroke, and kidney failure.

Rather than reimbursing the insured for his or her medical expenses the way that a health insurance policy does, the critical illness rider provides funds to use for any purpose that the insured sees fit during their course of treatment.

Waiver of Premium

The waiver of premium rider option can free the insured from having to make premium payments if he or she becomes ill or disabled prior to a certain age and are unable to afford the premium payments on the policy.

With this option on a life insurance policy, the policy dividends can continue to be paid and the cash value can continue to grow, just as if regular policy premiums had been paid. Prior to the waiver of premium starting, there is oftentimes a waiting period of six months of disability. In addition, prior to the waiver of premium paying the insured’s premiums, the insured must provide evidence to the insurance company that he or she is in fact disabled.


Susan Wright holds a BA from Michigan State University and an MBA from St. Louis University. Having over 20 years of working experience in the insurance and financial services industry, she has trained more than 10,000 financial services representatives. Susan has had licenses in real estate, insurance, and NASD Securities, and she has earned nine industry professional designations, including CLU, ChFC, RHU, REBC, CSA, CLTC, CCFC, CSS, and ADPA. Read more about her on Google+

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