Life insurance offers death benefits to your loved ones, but policies also can add riders that go beyond basic life insurance coverage. In fact, some life insurance riders let you benefit from coverage while you’re still alive.

Let’s take a look at life insurance riders and help you decide whether adding a rider to your policy is right for you.

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What is a rider on a life insurance policy?

Life insurance riders are additional benefits added to a basic life insurance policy, typically for an additional cost.

Adding one or more riders enables you to customize your policy to your needs and play a role in an overall personal finance plan. Adding a rider may offer you and your beneficiaries extra financial protection if particular circumstances arise that are covered by the rider.

"A life insurance rider adds a specific extra component to your life insurance policy that can provide an additional living or death benefit if certain conditions are met," says Austin Barnes, vice president of partnerships for Harbor Life Settlements and Harbor Life Brokerage in Austin, Texas. "Conceptually, riders allow you to pay pennies on the dollar for additional life insurance coverage. But this coverage comes with very specific stipulations."

Mark Friedlander, director of corporate communications for the Insurance Information Institute in St. Johns, Florida, notes that a rider can make your life insurance policy more flexible.

"That's because a rider permits you to add useful features or extend coverage to situations that a standard policy might not allow," he says.

Riders may vary by life insurance companies, so shop around the get quotes from multiple insurers.

Key Takeaways

  • Riders are added benefits included in life insurance policies.
  • Some life insurance riders can benefit you while you’re still alive.
  • The two most common life insurance riders are disability waiver of premium and accidental death and dismemberment coverage.
  • Life insurance policy riders often increase costs to premium payments, but some riders can be added without any charge.

10 popular life insurance riders

There are many riders that insurance companies offer. Which one makes sense for you depends on your situation and what you want from the policy.

John Seltzer, CLU, Engle-Hambright & Davies, Inc., says the two most common riders are disability waiver of premium (DWP) and accidental death and dismemberment (AD&D).

"DWP continues to pay the premium on your policy in the event you become disabled and cannot work. AD&D, sometimes referred to as double indemnity, pays an additional death benefit in the event you die in an accident. Many times, that amount is equal to the face amount of the underlying policy -- hence the name double indemnity. This benefit also pays in the event you become dismembered or lose the use of limbs, eyes or hearing,” Seltzer says.

Here are 10 life insurance riders that could be available to you.

1. Waiver of premium rider

This rider waives the premium if you become disabled and not able to work.

The waiver of premium rider provides benefits only if you become disabled, after which the charges won't apply, but the policy is still active.

This waiver often expires at age 60 or 65.

2. Disability income rider

A disability income rider allows you to collect a regular income from the insurance company if you become disabled and can’t work. The rider specifies the amount you’d receive and the length of time.

Some disability income riders pay out only if you became disabled from an accident, while others include sickness coverage.

3. Guaranteed insurability rider

This rider allows the insured to purchase additional life insurance coverage at a later date without undergoing a medical exam or giving any evidence about your insurability.

Health is unpredictable, and your health status can fluctuate. Plus, as you age, you become a bigger risk. That means your life insurance rates would increase.

With this option, however, you can get more insurance at specific intervals, such as every three years, or at certain ages.

4. Term conversion rider

Term life gives you coverage for a certain period, such as 10, 20 or 30 years. However, a term-to-perm conversion rider lets you transform your term life policy to permanent life insurance.

Why would you want to convert from term to perm? Your life may have changed. You bought a term life insurance policy with a higher payout when you were younger and had a hefty mortgage. Now, maybe the kids are all out of college and you paid off your mortgage. You might just want a death benefit that will help with final expenses.

This rider lets you convert your term life insurance policy without taking a medical exam. There’s usually a deadline to convert the policy, so make sure you transition the policy within that time period.

5. Accelerated death benefit rider

This rider allows you to collect part of the policy's death benefit should get a terminal illness with a short life expectancy (a year or less, usually).

The policy spells out how much of the death benefit is available before death. Policies usually cap this at $250,000 to $500,000.

You can use the proceeds for anything, such as paying medical bills or living expenses. The accelerated death benefit rider is often part of term life policies. It’s usually added at no cost or a small amount. However, the life insurance company may charge a fee if you tap into the rider.

6. Critical illness rider

If you've purchased a critical illness add-on, the insurer will give you a lump sum if you're diagnosed with a critical illness. The insurer specifies the illnesses in the policy. It’s often issues like cancer, heart attack and stroke.

The rider provides money to use for any purpose during treatment rather than reimbursing you for medical expenses. If you tap into a critical illness rider, your beneficiaries will get a small death benefit.

7. Child protection rider

A child protection rider is an add-on that insurers offer that provides coverage for your child in case of death. The death of a child might not mean income loss, but this tragedy could cause financial consequences and burdens.

The add-on provides coverage for final expenses, which is often an additional hardship for the family. The rider requires information about the child's health and you can usually pay in installments.

8. Accidental death benefit rider

This rider provides an additional benefit on top of the policy's regular death benefit if you die from an accident. If the payout equals the original death benefit, it's often called a double indemnity.

Sometimes the rider also includes additional payment for dismemberment. In that case, it’s called accidental death and dismemberment or AD&D. You collect money if you lose a limb or your sight if you have AD&D.

Life insurers consider your occupation and hobbies when determining premiums for this rider. High-risk activities, such as race-car driving, will increase rates for AD&D coverage.

9. Return of premium rider

This add-on gives you all your premiums back should you live to the end of your original term insurance policy. Some companies write this "return of premium benefit" into the base policy, but most offer it as a separate rider. To get this, you'll pay a much higher premium for the option to get your money back.

How much more? A 50-year-old woman classified as “Preferred Plus” health status would pay on average $1,120 annually for a 20-year policy with a $500,000 payout. The same person would pay $4,226 for a policy with a return of premium rider on average.

The big question to consider: How does paying the extra cost for the return of premium riders compare to investing that money and buying a basic term policy instead?

Here's what you do:

  • Subtract the annual premium for a basic term policy from the yearly cost of a return of the premium policy. The difference is how much you have to invest each year during the insurance term.
  • Calculate what you'd need for an annual rate of return to exceed the amount you'd get back from this return-of-premium policy.

So, using the example above, you could invest $3,106 each year over 20 years rather than get a return of premium rider.

Keep in mind that the money from the return of the premium is tax-free. That might not be the case for investment returns.

10. Long-term care rider

This optional add-on gives the policyholder financial benefits if you need daily care if you’re unable to provide for yourself. This can include in-home, assisted living or nursing home care.

A long-term care rider can be called combination life insurance. Combination life insurance offers a permanent life insurance policy, such as whole life, with the long-term care insurance rider. This rider allows you to tap into hte policy's cash value should you need it. The money goes to the death benefit if you don't ever use it.

A decade ago, people were more apt to have long-term care insurance. Now, the norm is combination life insurance.

"Combination life insurance is becoming the most common way to purchase long-term care insurance today," said Seltzer. "While there are still some companies selling traditional standalone long-term care policies, most have discontinued these because of the significant rising cost of these policies. As a result, most insurance companies have turned to these combination policies."

Are life insurance riders worth it?

While some riders are free, most increase the cost of your premium. That's why it's wise to carefully evaluate if the coverage from the rider will ever be used and if the additional cost is warranted.

"For example, a waiver of premium disability rider may make sense if you have health issues, as it lets you stop paying your premium if you become permanently disabled or lose income due to an illness," explains Friedlander. "However, adding any sort of rider could increase your premium, perhaps significantly. So it's a good idea to get policy quotes both with and without the riders you are considering to see how much it changes your premium cost."

What are the benefits of life insurance riders?

A rider can offer several advantages, but it depends on the rider, your unique needs, and the likelihood that you’ll need that rider coverage.

Barnes says someone with a pre-existing condition or family history of cancer or a high-risk career may benefit from a rider, such as long-term care, critical illness and guaranteed insurability.

"And even if you never get paid out for the rider, it can be a relatively inexpensive addition to make to your policy,” Barnes adds.

There's also the incalculable benefit of peace of mind: knowing that you have extra protection in place in case you need it.

Like home and auto insurance, the main plus of adding one or more riders is that they can help you achieve your financial goals, according to Rafael Rubio, president of Stable Retirement Planners in Southfield, Michigan.

"But the primary drawback is that you could end up paying for something you may never use or need," he adds.

So, which riders are right for you?

"Whenever purchasing life insurance, you should weigh your options carefully and make sure they fit your situation," concluded Seltzer. "There are many different types of life insurance that can be designed to fit your specific needs. Understand what is guaranteed and what is not. It also isn't a bad idea to get a second opinion."

Can you add a rider to an existing life insurance policy?

In most cases, you aren't allowed to add a rider to a life insurance policy that is already written. But the good news is that some insurers permit rider additions after the fact based on particular situations.

"For example, child protection riders can usually be added to an existing policy. Many people purchase life insurance before they have children; they can call their agent after their baby is born to give the information on the child and add the rider," says Lynette Barbieri, a licensed financial professional with Primerica Financial Services in Morganville, New Jersey.

When you go through the underwriting process for your life insurance policy, "you should talk to your insurance professional or financial advisor about your life insurance rider options and determine which riders you would like to add to your policy," Friedlander recommends.

Note that if your insurer allows you to add a rider after your policy is in force, you will most likely have to go through the entire underwriting process again.

Frequently Asked Questions

What does a rider expiration date mean?

A rider may terminate. If that happens, the benefit no longer applies to your policy.

"Case in point: You can only have a waiver of premium rider on your policy until a certain age. So if your rider expires at age 55 and you become disabled at age 56, you would not be able to use that rider anymore," says Lynette Barbieri with Primerica Financial Services.

If there’s an expiration date, it would be indicated on your policy.

What is a daily living rider?

A daily living rider accelerates a portion of your life insurance policy's death benefit in the event you've been chronically ill for a minimum of 90 days and remain ill for an additional 90 days or beyond.

Barnes says that if you don't qualify for long-term care, "a daily living rider may provide you a daily allowance to cover your long-term care needs, such as assisted living or nursing home care. But to qualify for a daily living rider, you must require help in the form of two activities of daily living (ADLs), which are a way to evaluate an individual's level of functioning."

Are long-term care riders on life insurance a good deal?

Depending on your needs and financial goals, a long-term care rider can be worth the money.

These riders can help pay for:

  • In-home care
  • Medical equipment
  • Other health care costs associated with aging

They can also be more affordable than standalone long-term care policies, says Rafael Rubio with Stable Retirement Planners.

"If your goal is to get something like long-term care, then adding a long-term care rider can be a good deal. But if your goal is to ensure your estate in case of your death, it may not be a good deal because a long-term care rider is basically a living rider and your policy's death benefit may be decreased if you include this rider in your policy," he says.

What is a cost-of-living rider?

A cost-of-living rider allows you to automatically increase life insurance coverage benefits to your existing policy based on the Consumer Price Index, which counters the effect of rising inflation over your policy's lifespan, says Friedlander.

"However, your premium will rise as your cost-of-living rider coverage amount increases," he says.

How does a chronic illness rider work?

A chronic illness rider is a life insurance option that provides a way to take out money from your life insurance policy if you’re diagnosed with a qualifying chronic illness. This is regarded as an accelerated death benefit rider that can be added to your policy possibly at no extra cost.

"A chronic illness rider may be worth adding if you have a chronic medical condition or a history of severe illness. A qualifying chronic illness means you are unable to perform at least two activities of daily living -- such as eating, bathing, getting dressed, toileting, transferring, and continence -- for at least the past 90 days or if you suffer from a severe cognitive impairment," explains Friedlander.

However, adding this rider usually reduces your policy's death benefit payout.

What is the difference between a chronic illness rider and long-term care rider?

A chronic illness rider only provides payment if a permanent diagnosis of chronic illness is made. It pays a lump sum without restrictions on how it may be used.

A long-term care rider, on the other hand, requires that you have a need to last 90 days or longer, and this benefit can be used multiple times over several years.