Term life insurance riders: What they are (and why they’re useful)

Everyone’s life is unique, filled with different needs and circumstances. Let’s say you work in a high-risk field, while your neighbor is a stay-at-home parent to a growing family. Though it’s possible you and your neighbor can enroll in term life insurance with the same death benefit, there’s so much more to your policy than your payout amount.

You’re probably thinking — isn’t that the only reason people enroll in term life insurance?

People enroll in term life insurance for all sorts of reasons. And while you do your research, you’ll notice that policies (and even their prices) aren’t one-size-fits-all. It’s all based on your situation, and there’s ample room for add-ons and customization — more formally known as riders. Let’s take a closer look at what they’re all about.

What is a life insurance rider?

Riders are additional features you can purchase to add to your term life policy so you can tailor it to best fit what you need and increase coverage. They are attached to your basic policy — usually at the time of signup.

Your life insurance rider options depend on where you get your term life policy from. Keep reading to find out the different types of life insurance riders we offer through this partnership.

What are the different types of life insurance riders?

You can customize your term life policy to meet your needs as life unfolds with these four options.

Waiver of premium

If you become critically ill, injured, or disabled, it may be difficult to pay your monthly life insurance premiums. This option can waive your insurance premium payments until you are able to return to work full-time, ensuring your policy is still active.

While no one expects the unexpected to happen, this rider can help keep you and your family secure — even during a financial hardship.

Accidental death

In the case of a fatal accident, this rider pays out an accidental death benefit to your beneficiary (that’s above the current benefit limit of the policy).  

This rider is ideal for those who work in a hazardous occupation or can’t afford to buy sufficient life insurance coverage — but make sure to read the fine print. Certain insurance companies can be very specific when it comes to defining “accidental death” and other terms.

Sometimes, this rider can be purchased as a standalone insurance policy, and offered by credit card companies, lenders, and credit unions. Do your own research if you’re interested in accidental death insurance — and triple-check that the insurer is in good standing to be in business. You don’t want to run the risk of the company going out of business during your insurance plan timeline. (It can happen!)

Children's term life insurance

Whether they are biological, adopted, or stepchildren, you can add on term life coverage for your kids, too.

A children’s term life insurance rider can provide coverage for every child in your family for the same price. So if you have two or more children under the designated age, this can be a cost-effective way to purchase coverage for all your children — with one low premium! Coverage is typically available for children 15 days of age to 18-25 years of age, but this depends.

Keep in mind that child life insurance riders don’t always offer a lot of coverage — most typically average between $10,000 and $25,000 per child. However, you might be able to buy additional coverage if you need it.

The rider will expire when a child reaches adulthood. The exact age is determined by your insurer. When it does, you or your child can choose to purchase continued coverage.

Accelerated death benefit

This rider would allow you to receive a portion of your life insurance benefit early and is often a standard feature of a life insurance policy. This means that you can opt-in at the time of signup to include this rider at no extra charge (unless you decline when you apply). Some insurers may require an additional premium, just FYI.

If you are diagnosed with a chronic, critical, or terminal illness, this option will allow you to receive most of your benefit payout prior to your death and help offset costs associated with your condition, like long-term care. Some examples of conditions include:
 

• A terminal illness with death expected within 24 months.

• An acute illness, such as acute heart disease or AIDS, resulting in a drastically reduced life span without treatment.

• A catastrophic illness requiring extensive care and treatment (such as an organ transplant).

• If long-term care is needed because you cannot perform activities such as bathing, dressing, or eating.

• If you are permanently in a nursing home.
  
  

Generally, there aren’t any restrictions on how you spend your accelerated death benefit. You can use it to pay for hospital bills, medications, and more, as the benefit is meant to alleviate a sudden financial hardship.

Your death benefit would be reduced by the amount you decide to take out, and the remainder will be paid to your beneficiaries if you were to pass away. Most insurers require that it be at least 10% of what your original death benefit amount was.

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

 
In most cases, you must add on riders when you are initially purchasing the policy, so it’s important to take some time and research all the options available to you. But if you currently have a term life insurance policy, don’t fret! There might be opportunities to add on certain riders to existing policies — be sure to check with your insurer about your options if you’re interested.

How much do life insurance riders cost?

 
The cost depends on your policy term, the rider(s) you’d like to add, and a few other factors. Some life insurance riders, like the accelerated death benefit, can be elected at no extra charge.

Typically, the cost of an add-on life insurance rider costs less than standalone coverage would. For example, if you bought a standalone term life insurance for your children, the premium would likely be significantly more.

Here are some examples of factors that can affect your policy:

• Age. Generally, the younger you are, the less you’ll pay for life insurance. That’s why it’s wise to buy life insurance as early as possible. The longer you wait, the more your rates will increase.

• Gender. Women will almost always pay less than men of the same age and health for life insurance. Why? One simple truth: women have longer life expectancies. (80.5 years for women and 75.1 years for men, if you’re curious.)

• Health. This includes pre-existing conditions, your blood pressure, height, and weight.

• Your smoking status. Since smokers are at a higher risk of developing health issues, they are charged a higher rate for their term life policies.

• Your family medical history. You might be asked if you have a family history of health conditions such as heart disease, diabetes, or cancer.

The easiest way to see your term life insurance premium cost

Want to know the easiest (and fastest) way to see how much your term life insurance premium would be? Sure, a multi-million-dollar payout sounds like a great idea, but there’s a good chance you might not need that much. A good rule of thumb is to buy a policy valued at a minimum of 10 times your annual salary.

Ultimately, feel safe and secure that your tomorrow is protected — on your terms.