A life insurance policy, whether it’s term or whole, provides a financial benefit to your family or beneficiaries in the event of your death. A standard life insurance policy is an excellent hedge against future calamity, but you can also add riders to make your policy more comprehensive. Riders are additional benefits that provide you with financial support while you’re still alive but experiencing adverse life circumstances or have an early death. Here’s a look at how riders work and some of the more common types.
What Are Life Insurance Riders? An Overview
A life insurance rider is an additional coverage you can buy and add to your life insurance policy. It’s intended to add coverage that’s not included in the main insurance policy and may not be available as an option in similar policies. Riders are well-defined in terms of their coverage, and you can expect to receive their benefits in the same way as your main policy when invoked.
Adding a rider usually increases the cost of a life insurance policy, which is something to consider when looking at life insurance for your Bronx, NY, employees or family. But the extra expense may be worth paying, especially if you want to cover as many risks as you can.
Riders add more value to your life insurance policy by paying for life events that alter your ability to earn a living. You benefit in the form of getting funds to help pay for vital needs that you couldn’t otherwise afford. They provide you with security and confidence that you’ll be able to handle the future while reducing your financial stress.
Why Adding Riders Can Enhance Your Life Insurance Policy
A life insurance policy is something you keep for decades, if not your entire life. There’s a lot that can happen to you throughout your life that can impact your ability to earn and provide for your family. Riders are designed to anticipate various major life changes, such as adding more family members or paying out early if you become terminally ill.
Riders also add flexibility to your life insurance policy by providing coverage for certain events while you’re still alive. Without them, your family won’t be able to access the benefits until after you’ve passed. They’re especially useful if you have a young family and you’re the main provider.
Common Types of Life Insurance Riders Explained
Riders come in different types, but the insurance industry has standardized them to a point where you can expect to find them offered by most insurers. It’s similar to getting small business health insurance for NYC employees in that there’s some variation from insurer to insurer, but not to extremes. Here’s a look at some of the most common types of life insurance riders.
Guaranteed insurability
This rider lets you get additional coverage during the time it’s active without undergoing further medical examination. In the event you experience a significant change in your life, such as a new child or a boost in your income, you can get more coverage without the physical exam requirement. You may also be able to renew your policy without an exam.
Accelerated death benefit
Also known as a terminal illness rider, this rider lets you claim your death benefit while you’re still alive. The insurer pays out the benefit based on the schedule that’s laid out in the policy, and any remaining funds are paid to your beneficiaries after your passing. You can take advantage of the funds while you’re still able to make decisions.
Critical and chronic illness
In the event you become diagnosed with a severe illness that won’t resolve on its own or with treatment, you can access your death benefit as long as you have qualifying conditions. The exception to this rider is the accelerated death benefit, which covers terminal illnesses that aren’t included in this rider.
Accidental death
A life insurance policy typically pays out in the event of an accidental death, but this rider doubles the amount of money your beneficiaries receive if you die in an accident. Also known as a double indemnity rider, it doubles the face value of your policy. You should be aware that the life insurance company may limit the meaning of an accident to certain types and restrict the terms of the claim.
Margolis & Associates: Helping You Customize the Perfect Life Insurance Policy
At Margolis & Associates, we understand how life gets difficult when you least expect it. That’s why we offer life insurance policies with riders that cover a variety of contingencies. Contact us to talk about getting a policy and the benefits of adding riders to further protect you and your family.