Life Insurance Riders and what do they do?

What are life insurance riders?

Life insurance riders are additional coverage that can be attached to an application for term or permanent plans of insurance.

The life insurance riders will typically have an additional premium charge. Although, some life insurance riders are included on the base policy with no additional premium.

Examples of life insurance riders

There are a multitude of life insurance riders that can be added to life policies. Below are some of the more common riders that are attached to the base policies:

  • Accelerated Benefit Rider-  the accelerated benefit rider, if offered on a policy, typically has no extra charge. This benefit allows for an insured to have access to the death benefit prior to death.

These life insurance riders offer access to the death benefit if needed for chronic illness.

A licensed physician must certify that the insured is chronically ill and permanently unable to perform at least two of the six activities of daily living or is terminally ill.

Case Study:  Jerry, age 65, is retiring.  Jerry has been the primary wage earner for his family and has built a substantial 401(k) balance.

At age 59, he purchased a $500,000 policy that included the accelerated benefit rider. This protects Jerry in several ways:

  1. Should Jerry become chronically ill, as defined by the accelerated benefit rider, a significant portion of the death benefit can be accelerated to help pay medical bills, a mortgage, or a trip of a lifetime. The use of a portion of the death benefit for this purpose could preserve other assets.  This can avoid burdening other family members with ongoing medical bills.
  2. Having the $500,000 death benefit in place could give Jerry the ability to spend down his retirement assets. Knowing that if he dies, his wife will receive the death benefit.
  3. Should Jerry outlive his spouse, he has the option of retaining the full death benefit for other heirs.

Fact: It is estimated that by the year 2020 over 81 million people will have two or more chronic conditions.

  • Waiver of Premium for Total Disability Rider-  disability of a primary income earner  can be a tremendous hardship on a family. The waiver of premium rider provides continuation of insurance protection without payment of premiums in the event of total disability of the insured. Typically the definition for disability waiver of premium to apply is defined as unable to do “own occupation” for the first five years and “any” occupation after five years. This rider also typically ends between ages 55 and 60.

Fact: According to www.disabilitycanhappen.org a 20 year old has just over a 1 in 4 chance of being disabled in their lifetime.

  • Accidental Death Benefit Rider– Life insurance riders that provide a supplemental death benefit if the insured’s death results directly from accidental bodily injury within 180 days of an accident. This rider typically expires at the end of the primary insured’s nearest age 70. Usually this rider pays double the amount if the insured dies while a passenger on a public conveyance. Most accidental death benefit riders have a maximum amount that will be offered. Typically this is between $250,000 and $500,000.

Fact: Accidents are the fourth leading cause of death in the United States

  • Guaranteed Purchase Option Rider- Life insurance riders that guarantee the policyholder the right to purchase additional coverage at pre-determined points in the future. This option does not require evidence of insurability. This can be a very valuable rider if there have been any changes in health since the policy was originally issued.

Typically this rider allows for an insured to increase the death benefit amount at specifics times in the future. As an example, a 25 year purchases a $100,000 with the guaranteed purchase option rider. This rider may offer him additional coverage at ages 28, 31, 34 and 40. Again, no proof of health is required to add the additional coverage. Typically this rider does have a maximum amount of additional coverage that can be added.

  • Child Rider– Life insurance riders that allow additional coverage to be included on a child or children of the primary insured. The amounts of death benefit that are offered for a child is typically $10,000 per child. Some companies may offer as much as $25,000 per child. The child rider will usually end when the insured reaches age 50. In addition, typically when the age of a child reaches between 21 and 25 the rider option will expire. At that time, the primary insured may have an option to convert the child rider portion of coverage to a new policy.

These are examples of some of the most common life insurance riders. Each rider has advantages and disadvantages. It is important to discuss with your agent what your current and future goals are when considering a rider. 

Many common quoting systems found online do not offer the ability to quote life insurance riders. Ask your agent for more details on what riders might be avaialble. If you would like to discuss any of the life insurance riders discussed in this article or simply want to look at options that are avaialble, please contact us at 1-888-393-9003 or mike@specialriskterm.com

 

 

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Mike Raines

I am an independent life insurance agent with over 30 years’ experience. I am an expert in finding coverage for those with past or current medical history such as heart disease, diabetes, post cancer, etc. I also specialize in those that participate in scuba diving, mountain climbing, private pilots, etc. I work with the best life insurance companies in the nation, such as Prudential, AIG, Protective Life, Transamerica to name a few. Each carrier has different opinions on rates and underwriting, and it is my job to match you with the best company. To do that, I need to ask you a few questions about your health and lifestyle to qualify you.

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Email: mike@specialriskterm.com

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Cumming, GA 30041

Testimonials

As someone with a past cancer diagnosis, finding life insurance had been a huge annoyance. Mike made it easy, and somehow found quotes that were significantly more affordable than what others gave me.

- Matthew from St. Louis, MO.

Mike did an awesome job in finding affordable coverage for myself and my husband. Highly recommend his services.

- Shannon from Atlanta, GA.

Best rates and best service I have ever received.

- Robert from Kennesaw, GA.

Mike and his team made the entire process from start to finish very seamless and also overcame the task with us being multiple states apart with ease. With the easy process and very competitive priced insurance for high risk athletes, you have no need to look anywhere else for coverage. Thanks to Mike and his team for all they did and I highly recommend them for your Special Risk Life Insurance needs.

- Tyler C. from Danville, VT.

I tried several places before I came across Mike’s website. The insurance at these other places was either very expensive, or the company wouldn’t cover me because of my health history. Mike was able to find me a reasonably priced policy with a major insurer. He did a great job locating a policy that works well for me.

- Jeff from Hermon, ME.

I could not be happier working with Mike Raines to get life insurance coverage for myself after having been declined for health reasons by my employer. My wife and I just had a son and it had become more imperative than ever that my family be protected if I were to pass away. The health screening appointment was conducted at my home around my schedule, which was very convenient. It was clear to me that Mike went above and beyond to make sure the underwriter fully understood my situation, going to bat for me so that I would not be declined again. I am a very happy customer.

- Daniel S. from Seaside, CA.

Two Thumbs Up for Mike at Special Risk Term

- Yaniv from Troy, MO.

Mike did an outstanding job getting me my coverage. He went above and beyond answering all my questions. He always returned my calls immediately even on the weekends!!! I highly recommend him.

- Aileen from Woodstock, GA.

It’s not easy to find life insurance with a chronic condition such as crohn’s disease which is why I greatly appreciated having Mike on my team. Mike is responsive, patient, professional and indefatigable- all things you need when you’re looking for a competitive policy. Knowing my family will be taken care is not only a relief but a huge confidence boost and I’m thankful Mike works in the special risk insurance arena. I would absolutely work with him again. Thank you Mike!

- Bobby from Washington D.C.
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