All life insurance provides a key benefit: if the insured dies, a death benefit is paid to the beneficiary. But that does not have to be all that your policy does, because with the right life insurance riders in place, you can SUPERCHARGE your term life insurance or permanent life insurance protection.

When a rider is attached to a life insurance policy, it changes the contract to improve flexibility for the policyholder or perhaps even to provide additional protection in life as well as death.

Which we have found can even make the most skeptical life insurance procrastinator think twice about not getting the coverage that they need!

This is why we here at IBUSA have chosen to list what we feel are the 15 top life insurance riders one should consider when choosing to get insured.

Now, do we recommend added all of these riders to your policy?  No, not at all, but we’re sure that after reviewing some of the options that might be available to you, you’re sure to want to learn more before deciding one way or another.

Life Insurance Riders

Depending on your chosen life insurance policy type, whether term life or permanent life insurance, you will have access to several different options that enhance the protection of your policy in the form of riders.

Not everyone needs these additional riders but they are certainly worth taking the time to familiarize yourself with as they can add much value in the right circumstances.

Conversion Option Rider

A conversion option rider is a type of endorsement or rider that can be added to a life insurance policy. It allows the policyholder to convert their term life insurance policy to a permanent life insurance policy without having to undergo a medical examination.

Conversion option riders are typically available for a limited time period, such as during the first 20 or 30 years of the term policy. They can be a useful option for individuals who may not be able to qualify for a permanent life insurance policy due to their health or other factors at the time they purchase their term policy, but who may be able to qualify for a permanent policy at a later date.

In some situations, the term policy that you choose may already provide a conversion option built within it in which case you would not have to purchase an additional rider to receive this benefit.

However, its always important to review your policy to fully understand how the conversion option works regardless of whether you have to pay an additional fee for it or it is provided to you as part of a traditional term life insurance policy.

Potential benefits of a conversion option rider include:

Pros:

• Provides flexibility: A conversion option rider allows the policyholder to convert their term life insurance policy to a permanent life insurance policy without having to undergo a medical examination. This can be useful for individuals who may not be able to qualify for a permanent policy due to their health or other factors at the time they purchase their term policy, but who may be able to qualify for a permanent policy at a later date.
• Continuity of coverage: A conversion option rider allows the policyholder to maintain their life insurance coverage without having to go through the process of applying for a new policy. This can be especially useful for individuals who may have developed health problems during the term of their policy that would make it difficult to qualify for a new policy.

Cons:

• • Limited coverage: A conversion option rider is typically only available for a limited time period, such as the first 20 or 30 years of the term policy. If the policyholder wishes to maintain coverage beyond this time, they will need to reapply for a new policy.
  • May not be available for all policies: Not all term life insurance policies offer a conversion option rider.

Accelerated Death Benefit Rider

An accelerated death benefit rider is a type of endorsement or rider that can be added to a life insurance policy. It allows the policyholder to access a portion of their life insurance death benefit while they are still alive in the event that they are diagnosed with a terminal illness or are permanently confined to a nursing home.

Accelerated death benefit riders are designed to provide the policyholder with financial assistance to help cover the costs of end-of-life care or other expenses related to their terminal illness or nursing home confinement. They can be a useful option for individuals who may be concerned about depleting their financial resources or leaving their loved ones with financial burdens while they are still alive.

In most cases, the insurance company will require you to submit a the doctor’s note will statign that you are expected to die within one year although some companies will accept two years or order for you to be able to qualify for this benefit.  At which point, they will then determine your eligibility.

The good news is that while this money is presumably supposed to help you pay for any medical bills or final expenses you may be acquiring, at the end of the day the money will be given to you to spend however you see fit.  A benefit, many appreciate because in many situations, this money allows an insured to take care of his or her loved ones as they deem is best.

In some policies, the accelerated death benefit rider will come free with insurance but you will need to check with the specific carrier you are considering just in case.

Pros and Cons of an Accelerated Death Benefit Rider:

Pros:

• Provides financial assistance: If the policyholder is diagnosed with a terminal illness or is permanently confined to a nursing home, the accelerated death benefit rider allows them to access a portion of their life insurance death benefit while they are still alive. This can provide the policyholder with financial assistance to help cover the costs of end-of-life care or other expenses related to their terminal illness or nursing home confinement.
• Peace of mind: The accelerated death benefit rider can provide the policyholder with peace of mind knowing that their loved ones will have financial assistance to help cover their end-of-life expenses.

Cons:

• Limited coverage: The accelerated death benefit rider only allows the policyholder to access a portion of their death benefit while they are still alive. It does not provide additional death benefit coverage.
• May not be available for all policies: Not all life insurance policies offer an accelerated death benefit rider.

Disability Waiver of Premium Rider

A Disability Waiver of Premium is a rider that can be added to a life insurance policy. It allows the policyholder to stop paying premiums on their life insurance policy if they become disabled and are unable to work.

The Disability Waiver of Premium rider is typically available for a limited time period, such as for the first 2 or 5 years of the policy. It is designed to provide the policyholder with financial relief during a period of disability when they may be unable to work and may be struggling to pay bills.

To qualify for the Disability Waiver of Premium rider, the policyholder must typically be disabled as a result of an injury or illness that is not work-related. The policyholder must also be unable to perform the duties of their occupation or any other occupation for which they are reasonably qualified by education, training, or experience.

Pros and Cons of a Disability Waiver of Premium:

Pros:

• Provides financial relief: If the policyholder becomes disabled and is unable to work, the Disability Waiver of Premium rider allows them to stop paying premiums on their life insurance policy. This can provide the policyholder with financial relief during a difficult time.
• Continuity of coverage: The Disability Waiver of Premium rider allows the policyholder to maintain their life insurance coverage even if they are unable to work and pay premiums.

Cons:

• Limited coverage: The Disability Waiver of Premium rider is typically only available for a limited time period, such as the first 2 or 5 years of the policy. If the policyholder’s disability extends beyond this time, they will need to reapply for a new policy or pay premiums out of pocket to maintain their coverage.
• May not be available for all policies: Not all life insurance policies offer a Disability Waiver of Premium rider.

The terms of a Disability Waiver of Premium rider will vary depending on the specific policy.

Guaranteed Insurability Rider

A guaranteed insurability rider can be added to a life insurance policy. It allows the policyholder to purchase additional life insurance coverage at a future date without having to undergo a medical examination.

The guaranteed insurability waiver is typically available for a limited time period, such as for the first 10 or 20 years of the policy. It is designed to provide the policyholder with the flexibility to increase their life insurance coverage as their needs change over time, without having to go through the process of applying for a new policy.

To qualify for the guaranteed insurability waiver, the policyholder must typically be in good health at the time the rider is added to their policy. The policyholder can then purchase additional coverage at a future date, regardless of their health status at that time, as long as they meet the requirements of the rider.

This waiver is most commonly purchased by younger applicants because it allows additional coverage to be purchased without any evidence of insurability.  It also works well for younger business owners who wish to increase life insurance coverage as the value of their business increases.

Starting at the age of 25, there will normally be options every three years and the end date for this will depend on the insurer.  While some companies stop offering the option at 40 years of age, other may reach to 46 years old.  In addition to this, alternate purchase options will also be made available if certain critical life events were to occur.

For example, birth of a child or even marriage are events that companies would allow the exercising of the option.  In some cases, you will also be able to exercise the option after adopting a child and making other significant changes to your life where you believe you will require more life insurance.

Pros and cons of a Guaranteed Insurability Rider:

Pros:

• Provides additional coverage: A guaranteed insurability rider allows the policyholder to purchase additional life insurance coverage at a future date without having to undergo a medical examination.
• Flexibility: The guaranteed insurability rider can provide the policyholder with the flexibility to adjust their coverage as their needs change over time.

Cons:

• Limited coverage: A guaranteed insurability rider may only be available for a limited time period, such as the first 10 or 20 years of the policy. If the policyholder wishes to maintain coverage beyond this time, they will need to reapply for a new policy.
• May not be available for all policies: Not all life insurance policies offer a guaranteed insurability rider.

Additional Term Insurance Rider

Much like the guaranteed insurability rider above, the additional term insurance rider allows additional life insurance to be purchased, generally around 4 times the current death benefit, on the insured, a family member, or an associate (such as a business partner) as long as an insurable interest exists.

The additional term insurance rider is typically available for a limited time period, such as for the first 10 or 20 years of the policy. It is designed to provide the policyholder with the flexibility to increase their life insurance coverage as their needs change over time, without having to go through the process of applying for a new policy.

To qualify for the additional term insurance rider, the policyholder must typically be in good health at the time the rider is added to their policy. The policyholder can then purchase additional coverage at a future date, regardless of their health status at that time, as long as they meet the requirements of the rider.

Pros and Cons of an additional term life insurance rider:

Return of Premium Rider

A Return of Premium Rider is a type of endorsement or rider that can be added to a term life insurance policy. It allows the policyholder to receive a refund of the premiums that they have paid on their policy if the policy is not needed (e.g., the policyholder does not die during the term of the policy).

The Return of Premium Rider is typically available for an additional premium. It is designed to provide the policyholder with the added security of knowing that their premiums will not be wasted if the policy is not needed.

The terms of a Return of Premium Rider will vary depending on the specific policy. It is important to carefully review the terms of the rider and understand what is and is not covered before adding it to your policy. It is also a good idea to speak with a financial advisor or insurance agent to understand your options and choose a policy that is right for you.

Pros and cons of a return of premium rider:

Pros:

• Provides added security: If the policy is not needed (e.g., the policyholder does not die during the term of the policy), the policyholder can receive a refund of the premiums that they have paid.

Cons:

• Additional premium: The Return of Premium Rider is typically available for an additional premium, which can make the overall cost of the policy more expensive.
• Limited coverage: The Return of Premium Rider only applies to the premiums that have been paid on the policy. It does not provide any additional death benefit coverage.
• May not be available for all policies: Not all term life insurance policies offer a Return of Premium Rider.

Accidental Death Insurance Rider

An accidental death benefit rider is a type of endorsement or rider that can be added to a life insurance policy. It provides additional coverage in the event of the policyholder’s accidental death.

Accidental death benefit riders may be standalone policies or may be added as an endorsement or rider to an existing life insurance policy. They may be offered as a term policy, which provides coverage for a specific period of time, or as a permanent policy, which provides coverage for the entire lifetime of the policyholder.

An accidental death rider, also known as an accidental death and dismemberment (AD&D) rider, is a type of insurance coverage that provides financial protection in the event of accidental death or accidental injury resulting in the loss of limb(s), sight, or hearing.

Pros and cons of accidental death insurance rider:

Pros

• Provides financial protection for unexpected, accidental deaths or injuries.
• Can provide peace of mind for individuals who are concerned about the financial impact of an accidental injury or death on their loved ones.
• Can be added to a life insurance policy at an additional cost.

Cons

• The coverage will not apply in all cases, such as suicides or deaths from natural causes.
• The coverage may not be sufficient to fully compensate for the loss of a breadwinner or the costs associated with long-term injuries.
• The coverage may be expensive, especially if added to a life insurance policy.

Long-Term Care Rider

A long term care rider can be added to a life insurance policy. The rider is used to provide income that goes towards long term care in a nursing home or similar facility.

Although the triggering event may vary, policies may require an individual to be unable to perform at least three activities of daily living (ADLs) without assistance, while others may require an individual to be unable to perform at least two ADLs. The specific ADL requirement varies depending on the company and policy.

Activities of daily living (ADLs): are basic self-care tasks that individuals perform on a daily basis. These tasks include bathing, dressing, toileting, transferring (such as from a bed to a chair), and feeding oneself.

Some insurance policies, such as long-term care insurance policies, may have an ADL requirement as a condition for receiving benefits. This means that an individual must be unable to perform a certain number of ADLs without assistance in order to be eligible for benefits.

An ADL requirement is one way that insurance companies may define the level of care that an individual needs in order to receive benefits.

Also, if the insured has severe cognitive impairment the LTC rider will typically be applied.

Pros and cons of a long term care rider:

Pros

• Provides financial protection for the high costs of long-term care services.
• Can help individuals maintain their independence and receive care in their preferred setting.
• Can provide peace of mind for individuals who are concerned about the financial impact of long-term care on their loved ones.

Cons

• The coverage may be expensive, especially if added to a life insurance policy.
• The coverage may have exclusions or limitations on the types of long-term care services that are covered.
• The coverage may require a waiting period before benefits are paid out.

Chronic Illness Rider

Although similar to the long term care rider, this one is slightly different because it requires the policyholder to prove that they cannot complete two of the activities of daily living.

In total, there are six and they are pivotal to survival – bathing, walking, eating, dressing, continence, and visiting the toilet.

A chronic illness rider is a type of insurance coverage that provides financial protection for individuals who have a chronic illness, such as diabetes, cancer, or heart disease. Chronic illness riders are often added to life insurance policies or standalone chronic illness insurance policies.

Child Term Rider

A child rider is a type of insurance coverage that provides financial protection for the policyholder’s children in the event of the policyholder’s death. This type of rider is often added to a life insurance policy or a term life insurance policy.

Pros and cons of a child insurance rider:

Pros

• Provides financial protection for the policyholder’s children in the event of the policyholder’s death.
• Can help ensure that the policyholder’s children have the resources they need to meet their financial needs.
• Can provide peace of mind for the policyholder, knowing that their children will be financially protected in the event of their death.

Cons

• The coverage may be expensive, especially if added to a life insurance policy.
• The coverage may have exclusions or limitations on the circumstances under which benefits will be paid.
• The coverage may only be in effect for a limited period of time (e.g. until the children reach a certain age).

Paid-Up Additions Rider (PUAR)

Paid Up Additions rider is added to whole life insurance policies that focus on accumulating cash vale.

With the paid up additions rider in place, the policyholder can increase the cash value of the policy and therefore impact the death benefit and living benefit.

If you are implementing some type of personal financing, such as infinite banking using your cash value life insurance, this rider can be incredibly useful because the policyholder can supercharge the cash value accumulation of the life insurance policy through the purchase of paid up additions that directly affect the cash value and death benefit of the policy.

The Paid-Up Additions Rider is added to your base policy, and it allows you to put more money into your policy than your base life insurance premium payment. This is done because life insurance provides certain tax incentives that make it a great place to store your wealth.

You can increase, decrease or skip electing to choose additional life insurance, offering you great flexibility.

Life Insurance Supplement Rider (LISR)

The LISR allows you to supplement your whole life with term life insurance. This rider is ideal for someone who wants whole life insurance coverage, but with a larger death benefit.

By electing to use the LISR, you blend less expensive term life with your whole life policy. Over time, as the base policy earns dividends, the term life decreases and eventually the entire policy is permanent coverage.

Renewable Term Rider

A renewable term life insurance rider is a type of insurance coverage that allows an individual to renew their term life insurance policy without going through additional medical underwriting. This type of rider is often added to a term life insurance policy.

With a renewable term life insurance rider, the policyholder has the option to renew their policy at the end of the term without going through additional medical underwriting. The policyholder may be required to pay higher premiums for the renewed policy, as the risk of death increases with age.

Pros and cons of a renewable term life insurance rider:

Pros

• Allows an individual to renew their term life insurance policy without going through additional medical underwriting.
• Provides an opportunity to continue coverage beyond the initial term of the policy.
• Can provide peace of mind for individuals who are concerned about the adequacy of their life insurance coverage.

Cons

• The coverage may be expensive, especially if added to a life insurance policy.
• The coverage may have exclusions or limitations on the circumstances under which benefits will be paid.
• The coverage may only be in effect for a limited period of time (e.g. until the policyholder reaches a certain age).

Disability Income Rider

A disability income rider is a type of insurance coverage that provides financial protection in the event that an individual becomes disabled and is unable to work. This type of rider is often added to a life insurance policy or a disability insurance policy.

With a disability income rider, the policyholder can receive a monthly benefit if they become disabled and are unable to work. The benefit is typically a percentage of the policyholder’s income and is paid for a specified period of time.

Pros and cons of a disability income rider:

Pros

• Provides financial protection in the event that an individual becomes disabled and is unable to work.
• Can help individuals meet their financial obligations and maintain their standard of living while they are unable to work.
• Can provide peace of mind for individuals who are concerned about the financial impact of a disability on their loved ones.

Cons

• The coverage may be expensive, especially if added to a life insurance policy.
• The coverage may have exclusions or limitations on the circumstances under which benefits will be paid.
• The coverage may require a waiting period before benefits are paid out.

Conclusion

When it comes to life insurance, these are the main life insurance riders that you will want to consider.

Of course, you might not want to add them all because you will be paying large amounts of money for your coverage but it can be good to add the ones that apply to your life.

As mentioned at the beginning, some offer increased flexibility while others provide an added layer of protection so hopefully we have given you something to think about!