Life insurance riders explained

When it comes to helping protect our loved ones financially, the death benefit from life insurance can be a valuable tool in a difficult financial situation if a primary income earner passes away. Since everyone’s needs are unique, policies can often be customized with life insurance riders to add extra coverage or benefits. This allows for a more personalized approach to financial protection and can provide living benefits that extend beyond the death benefit.

What is a life insurance rider?

A life insurance rider is an optional add-on to certain life insurance policies that can provide extra coverage or benefits beyond the basic death benefit. There are different types of life insurance riders, including accelerated death benefits, critical illness protection, or funds for long-term care. Some riders are automatically included on a policy at no cost, while others are available for an additional charge.

Different types of life insurance riders

There are several types of life insurance riders available, each designed to enhance a policy’s coverage and offer additional benefits tailored to specific needs. These riders can provide everything from critical illness benefits to flexible coverage options, depending on the policyowner's circumstances.

Life insurance with a long-term care rider

A long-term care rider is an optional add-on to a life insurance policy that allows individuals to access their life insurance benefits while they’re still alive if a chronic illness or disability prevents them from performing certain activities of daily living. To help policyowners be financially prepared for the potentially high cost of long-term care, this rider provides additional coverage for expenses related to long-term care, such as a nursing home or in-home care.

Accelerated death benefit rider

An accelerated death benefit rider allows policyholders to access a portion of their life insurance death benefit while they’re still alive if diagnosed with a terminal illness. This rider can provide financial support to cover medical bills, living expenses, or end-of-life care, helping to ease the financial burden during a difficult time.

Term insurance rider

A term insurance rider is an add-on to a permanent life insurance policy that can provide additional coverage for a specified term, usually at a lower cost. This rider allows policyowners to increase their death benefit for a set period and get extra protection during times of higher financial responsibility, such as raising children or paying off a mortgage. This rider can be a flexible option for those seeking temporary coverage without adjusting their entire policy.

Accidental death benefit rider

An accidental death benefit rider increases the overall death benefit and can provide beneficiaries with additional financial support if the policyowner dies as a result of a covered accident.

Cost-of-living rider

This optional rider increases the policy’s death benefit over time to keep pace with inflation. Adding this rider can help ensure that the coverage maintains its value and provides beneficiaries with a payout that reflects the rising costs of living at the time of the policyowner’s death.

Family income rider

A family income rider can provide a monthly income to the policyowner's beneficiaries if the policyowner passes away. This rider provides the family with a steady stream of income for a specified period, helping to replace lost income and maintain financial stability during a difficult time.

How does a life insurance rider work?

A life insurance rider is typically added to a life insurance policy at the time of purchase, but there may be instances where it can be added to existing coverage. Depending on the rider, adding these benefits may be included at no additional cost or may increase the premium. Unlike cash value on a policy, which can grow over time and can be accessed or borrowed against, riders provide specific benefits or coverage during the policyowner’s lifetime without accumulating a cash value.

Why purchase life insurance with living benefits?

Life is unpredictable, and unexpected events can often put a strain on finances. Adding a rider with living benefits to a life insurance policy helps provide greater flexibility and gives access to funds during the policyowner’s lifetime, helping to cover expenses in times of illness or disability. Life insurance with a long-term care rider can provide financial support for long-term care needs and help ensure policyowners have resources to manage medical or care-related costs without depleting their savings. Riders can also expand benefits to beneficiaries and provide comprehensive coverage now and for the future.

Which life insurance rider is right for you?

When it comes to choosing the right life insurance rider, it’s important to consider your specific needs and financial situation. Meeting with a financial professional can help you assess available options and determine which rider best complements the existing life insurance policy, achieves personal goals, and offers some protection for the future. They can also help you evaluate whether adding an annuity or other options to an overall financial plan can help enhance your long-term security and financial well-being. Together, you can build a financial plan that is tailored to your unique needs, offers lasting protection, and creates a solid foundation for you and your loved ones.

ACCELERATED DEATH BENEFIT ENDORSEMENT – CRITICAL ILLNESS IS NOT HEALTH OR DISABILITY INSURANCE NOR IS IT INTENDED TO REPLACE HEALTH OR DISABILITY INSURANCE.

Accelerated Death Benefits are subject to eligibility requirements.

The term financial professional is not intended to imply engagement in an advisory business in which compensation is not related to sales. Financial professionals that are insurance licensed will be paid a commission on the sale of an insurance product.

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