Understanding Riders and Add-Ons for Life Insurance Planning
According to this infographic from LIMRA, about 129 million Americans don’t have life insurance plans. That’s because most people aren’t sure where to start when it comes to this important part of financial planning.
What’s more, at least half of these families would face severe financial hardship if the primary breadwinner passed away. Buying life insurance is a vital component of providing ongoing care for your family, no matter what.
Keep reading to find out more about what to consider when you embark on life insurance planning to secure your loved ones’ future.
How to Maximize Life Insurance Planning
Life insurance plans rarely provide a one-size-fits-all solution, but you can customize your coverage thanks to the riders offered by most insurers.
Riders, also called “add-ons” are extra insurance policies that you can add to your basic insurance policy. They’re designed to cover aspects that you believe are necessary above and beyond a standard insurance policy.
These conveniences always come with a price tag attached and will increase your premiums. So, it’s important to think about which ones you need before you add them to your basic policy.
Always compare prices with and without the rider to ensure you can afford the premium before you sign up.
Why You Should Consider Life Insurance Riders
Riders let you adjust your life insurance coverage to enhance its flexibility, extend your coverage., and add useful safeguards. For instance, an accelerated death benefit helps you claim early if you’re unable to work due to a serious health condition.
Adding or Dropping a Life Insurance Rider
Buying life insurance comes with several decisions. For instance, you’ll need to decide on:
- Term or permanent coverage
- The amount of coverage you need
- The beneficiaries
Once you’ve covered these issues, you can consider any riders you might want to add. It’s always best to discuss these options with a professional insurance advisor.
The best time to add riders to your insurance policy is at the outset. You can add riders afterward but this is subject to terms and conditions. These depend on your health as well as the type of rider you want to add.
Life insurance riders increase the coverage amount of your insurance plan, so the insurer needs to calculate the risks associated with each rider. So, they will usually ask you to complete a health questionnaire or undergo a medical examination before adding a rider to your life insurance plan.
This helps them decide whether they can afford to offer you the benefit, and at what cost.
If you decide you want to add a rider to an existing plan, you’ll need to apply.
This is a simple enough process for most riders. In some cases, insurers can’t add a rider after you’ve signed up for a life insurance policy.
It’s a lot simpler to cancel an existing rider. All you need to do is inform the insurer of your wishes and fill out the relevant form. Once you submit the application, they’ll remove the rider from your life insurance plan and adjust your premium.
Types of Insurance Riders
If you’re looking for something specific that’s not offered by your insurer, like a life insurance retirement plan, you can even apply for international life insurance in UAE or the UK with a globally recognized insurer.
These international policies ensure people who regularly move between countries keep their coverage as they migrate, and provide many extra options when planning life insurance coverage.
These are some of the most popular life insurance riders:
Health-Based Life Insurance Riders
These riders revolve around issues that could impact your life expectancy. As a result, you’ll need to undergo a medical assessment when applying for them.
The most common ones are:
ADB (Accelerated Death Benefit) Rider
Also known as terminal illness riders, these add-ons allow you to claim some of your death benefits during your lifetime. Qualifying conditions depend on the insurer and the amount you’re allowed to withdraw from your benefit.
Specific conditions include:
- Critical or chronic illness, excluding terminal illnesses
- A necessity for long-term care
These riders may help to pay for necessary treatment or could pay out a lump sum for you to use as you see fit.
A waiver of premium rider waives your policy premiums if you can’t work due to developing a qualifying disability.
Accidental Death and Dismemberment (AD&D)
An AD&D rider pays out if you’re killed in an accident or can’t work due to an injury sustained during an accident. This includes the loss of your limbs or loss of limb functionality.
Life Insurance Family Plans
If you’re considering whole-life insurance plans, it’s best to think about your family members, too. The most common types of family coverage include:
Child and Spouse Riders
These riders pay out a small death benefit if your child or spouse passes away during the rider’s term. These riders provide much less coverage than if your spouse got their own policy.
However, it’s worth having a little extra cash available during these trying times. It can help pay for medical bills and funeral costs.
Family Income Rider
A family income rider pays an additional death benefit in monthly installments after the insured person dies. If you’re the sole breadwinner, this rider helps ensure your family has a regular income after you pass away.
Be Proactive About Life Insurance
Now that you know a little more about life insurance planning, isn’t it time you got your life insurance in order? Add-ons are the easiest and most affordable way to ensure your family’s taken care of when you can no longer provide for them.
No matter your age, it’s never too early nor too late to protect your loved ones with life insurance, but the longer you wait, the bigger your premiums become.
Keep browsing our blog for more information on a range of lifestyle topics.
