Insurance Riders 101: What you need to know

Have you ever heard of a rider in insurance? It's like adding extra toppings to your pizza but for your insurance policy. Consider it a way to customize your basic insurance plan to suit your needs better. In other words, a rider can give you more coverage options, which is great for protecting what matters most to you. But, just like those fancy toppings on your pizza, it might cost you a little extra.

Riders open up a world of possibilities, from granting access to your death benefit in case of disability to providing vital protection for your spouse. Here are some standard life insurance rider options and insights to choose the right ones for your needs.

What is an insurance rider?

A rider (also known as an insurance endorsement) is optional coverage that you can add to your standard policy. Think of it as a specialized add-on that seamlessly becomes part of your life insurance contract. These riders offer you the flexibility to fine-tune your life insurance coverage to align with your unique needs and preferences.

When you purchase a life insurance policy, you're typically provided with a pre-packaged set of terms, conditions, and coverage options laid out in the policy contract. However, these standard policies might not always cover your specific needs, which is why you have the option to customize them using insurance riders. Riders empower you, the policyholder, to make precise adjustments or enhancements to your standard policies, allowing you to tailor insurance products to suit your unique requirements.

Nevertheless, the decision to add an insurance rider is entirely up to you, the insured party. You'll need to carefully assess the cost against your specific needs. It's crucial to consider whether the advantages of a rider align with your individual circumstances.

Types of insurance riders

Life insurance riders come in various forms, each serving a specific purpose, especially regarding health-related situations. Here are some of the most frequently encountered life insurance riders.

Spousal insured rider

A spousal insured rider extends coverage to your spouse. This rider allows the primary policyholder to provide a death benefit if your spouse passes away. This rider is helpful if your spouse's health status inhibits them from purchasing affordable life insurance.

While your spouse won't receive the same level of coverage as they would with an independent policy, the rider provides modest protection to cover expenses such as medical bills or funeral costs.

Child insured rider

A child insured rider typically covers biological children, adopted children, and stepchildren before 21 years old. Depending on your insurance carrier, the rider might also expire when your child reaches a certain age, or the policy ends, whichever comes first. This rider provides a death benefit to help cover expenses for funerals, medical care, and the grieving process.

Accidental death rider (AD)

An accidental death rider increases the payout your loved ones receive from your life insurance if you pass away due to a covered accident.

For instance, if you have a high-risk occupation like being a lumberjack, where accidents are more likely, this type of rider can offer you peace of mind and added financial protection.

Accelerated death benefit rider

An accelerated death benefit rider enables you to receive a portion of your death benefit while you are still alive under specific circumstances. This rider offers financial support in the case of a terminal illness.

The conditions that trigger the benefit payment typically include a life expectancy of one year. Importantly, the funds received through this benefit can be used for any purpose.

Disability waiver of premium (DWP)

Imagine you find yourself in a situation where you're unable to work due to a disability. In such cases, a disability waiver of premium rider can come to your rescue by allowing you to stop paying life insurance premiums while preserving your death benefit.

This premium waiver remains in effect until your condition improves or, in the case of permanent disability, it lasts indefinitely. If your condition improves but you face the same disability or another eligible condition in the future, you can once again utilize the premium waiver provision.

However, it's important to note that these waivers of premium riders often come with an expiration date, which can depend on your policy and may coincide with your retirement age. Nevertheless, if your rider reaches its expiration and you still have a qualifying disability, your premium waiver will generally continue. The only difference is that you won't be able to initiate new claims for a premium waiver beyond that point.

Benefits of insurance riders

Life insurance riders serve as additional tools that empower you to customize and enhance your life insurance policy, tailoring it to better suit your unique needs. They offer a range of valuable features that can make a substantial difference. For example, consider an accelerated death benefit rider, which enables you to access a portion of your policy's death benefit while you're still alive if you're diagnosed with a terminal condition. Without this rider, the death benefit typically only becomes available to your beneficiaries after your passing.

It's important to understand that riders are typically incorporated into your life insurance policy at the time of purchase. Therefore, it's crucial to carefully evaluate which features you may require before finalizing your purchase. These riders can significantly augment the versatility of your policy, ensuring it aligns seamlessly with your financial and life protection objectives.

How much do insurance riders cost?

The price tag attached to a life insurance rider is determined by both the particular rider itself and the insurance company offering it.

Certain riders, such as accelerated death benefits, might come at a minimal or even zero cost, serving as added perks to your policy. On the other hand, a spouse rider comes with an additional cost but can be beneficial for someone whose spouse's health condition makes it difficult for them to obtain affordable standalone life insurance.

How to add or remove insurance riders from a policy

It’s a good idea to add any riders when you first buy your base life insurance policy. Conversely, when it comes to removing a rider from your policy, the process is usually straightforward. In most cases, insurance companies simplify this by allowing you to complete a form to authorize the removal of the rider.

Do you need an insurance rider?

When deciding if a life insurance rider is a good choice for you, there are a couple of important things to think about:

Immediate and future needs: Start by considering whether you need the extra coverage from the rider right now or if you'll need it later on. Think about your current financial situation and what you might need in the future.

Financial and emotional comfort: Next, ask yourself if you can comfortably afford the cost of the rider and if it gives you peace of mind. Think about whether not having it would make you worry.

Speaking of riders, check out the Gerber Life Family Plan. You can get Term life coverage for yourself (or Whole life, if you prefer) with the option to add riders for your spouse and/or child(ren) - all on one policy.

If you have any questions about life insurance, riders or to get a quote, give us a call at 1-800-704-2180. Our friendly life insurance representatives are standing by to assist you.