Life Insurance Riders: Everything You Need to Know

Katie DuncanJuly 22, 2022


Glacier showing above and below water

For many, life insurance is a major part of planning for the future. This type of insurance policy guarantees money to your beneficiaries in the event of your death. This gives life insurance many uses, including income replacement, business continuation, and estate preservation.

But did you know that life insurance is often customizable? Thanks to life insurance riders, you can add extra benefits to your base policy.

What is a life insurance rider?

If your life insurance policy is a scoop of vanilla ice cream, insurance riders are the toppings.

A life insurance rider is a type of optional coverage or additional feature that you can add to your life insurance policy. Riders typically add a little more to your premium but are not as much as the life insurance policy itself. In some cases, you can add a rider at no additional cost!

All in all, life insurance riders can be a great way to customize your coverage if the base policy doesn’t include exactly what you need.

When can you add life insurance riders?

It depends on the specific rider and the company. Generally, riders must be added to the policy when you are first purchasing it. However, there are some cases where you may be able to add certain riders at a later date.

Be sure to check with your insurance company if you have specific questions regarding when you can add certain riders.

Talk to a CFS* Financial Advisor

Want to take your retirement plans to the next level? Schedule a Amplify Wealth Management appointment with our colleagues at CUSO Financial Services (CFS).

What are the different types of life insurance riders?

Not all life insurance riders do the same thing. Here are a few of the most popular types that people choose to add to their policy.

1. Long-Term Care Rider

Long-term care riders allow the insured to use part or all of the policy’s death benefit for long-term care, should the insured need it. The insured can use the money to pay for expenses like a long-term care facility, nursing home, or an in-home healthcare provider.

2. Premium Waiver Benefit Rider

Have you ever considered what would happen to your life insurance policy if you became permanently disabled or seriously injured and were unable to make payments?

With a premium waiver benefit rider, a policyholder is no longer required to pay premiums in order to maintain the policy should they become disabled.

3. Guaranteed Insurability Rider

A guaranteed insurability rider allows you to purchase additional coverage at a later date (but within the state time period) without needing additional medical examination.

A guaranteed insurability rider can come in handy if you have a significant life change and wish to purchase additional coverage. You will be able to do so without providing evidence of insurability through additional medical examinations.

4. Family Income Benefit Rider

Should you pass away, this optional life insurance add-on will pay out your death benefit in monthly installments to your family. The goal is to replace the monthly income that you provided when you were alive.

5. Accidental Death Rider

An accidental death rider will pay an additional death benefit if the insured dies in an accident.

This rider will give your family additional financial aid if you die as a result of an accident such as a traffic accident, an incident involving heavy equipment, falls, drownings, etc.

6. Disability Income Rider

Like long-term care riders, disability income riders are activated while the insured is still alive. If the insured becomes permanently disabled, the disability income rider will pay monthly to provide a reliable source of income. The rider stipulations will determine how much and how long the policy will pay out.

7. Term Conversion Rider

Similar to a guaranteed insurability rider, a term conversion rider allows a policy to cover their existing term life insurance policy to a permanent life insurance policy at a later date without needing an additional medical exam.

8. Spousal Insurance Rider

If you want to insure your spouse without taking out their own policy, you can add them to your policy via a spousal insurance rider. This rider will provide the policyholder with a death benefit should their spouse pass away while the rider is active.

Note that a spouse rider won’t provide the same level of coverage as them having their own, separate policy. It likely won’t be able to replace their income, but it could provide funds to cover a funeral or similar expenses.

9. Child Rider

Similar to a spousal insurance rider, a child rider pays a small death benefit upon the death of one of your children. Different insurance companies have different restrictions around the maximum age of the children covered and the maximum death benefit that you can receive.

10. Cost of Living Rider

A cost of living rider adjusts your benefits for increases in cost-of-living without raising your premium.

11. Critical or Chronic Illness Rider

Similar to the disability income rider, critical or chronic illness riders allow the insured to use their death benefits while they are alive to cover their chronic illness needs.

Are life insurance riders worth it?

People often ask whether or not life insurance riders are worth it. Because they are a relatively inexpensive way to add value to your policy, many people find that they are indeed a worthwhile investment.

Insurance is one of those things that you hope you won’t need to use— but if you find yourself in a situation where it could help you or your family, you’ll be glad that you had it.

This isn’t to say that you should add every rider possible. Instead, consider which ones you’d be most likely to need given your life situation.

Understanding Your Life Insurance Policy

Anytime you take out an insurance policy— whether it’s life, auto, home, or health— it’s important to understand what is and isn’t covered. When picking out a policy, be sure to read the fine print and ask your agents questions. No one wants to end up in a situation where you think something will be covered but you’re left with nothing.

*Non-deposit investment products and services are offered through CUSO Financial Services, L.P. (“CFS”), a registered broker-dealer Member FINRA/SIPC and SEC Registered Investment Advisor. Products offered through CFS: are not NCUA/NCUSIF or otherwise federally insured, are not guarantees or obligations of the credit union, and may involve investment risk including possible loss of principal. Investment Representatives are registered through CFS. The Credit Union has contracted with CFS to make non-deposit investment products and services available to credit union members.

Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2018.

Talk to a CFS* Financial Advisor

Want to take your retirement plans to the next level? Schedule a Amplify Wealth Management appointment with our colleagues at CUSO Financial Services (CFS).

Katie Duncan

Katie Duncan is a financial writer based in Austin, Texas. Her articles include financial advice for freelancers, homebuyers, and more. When she’s not writing, Katie loves traveling and exploring the outdoors with her friends and her dog, Poe.