Life Insurance Rider(s) and Benefits

Insurance Rider(s) and Benefits Add Value to Your Policy

Benefits are features of your life insurance contract that are automatically included. You should understand the benefits of your policy as they can offer valuable financial planning options in your future.

Insurance Rider(s) are optional additions to your policy that can be added when you apply for the plan or at a later time. An insurance rider gives you a more customized and valuable plan tailored to your specific needs.

Accidental Death & Dismemberment (ADD)

Critical Illness Rider

Guaranteed Insurability Option (GIO)

Life Insurance Contractual Benefits

Renewable

This feature is included in all Term life insurance policies. It allows you to renew you life insurance policy after the term number of years has finished at a guaranteed renewal rate. If you have a Term 10 policy, after the first ten years finishes, you can renew it for the monthly or annual premium stated in your contract. There is no medical evidence required to renew your policy. So long as you agree to pay the higher premium, your life insurance will continue. The advantage is if you have developed a health condition and can no longer qualify for life insurance, you can continue your policy at the new premium rate without re-qualifying for the coverage.

Convertible

This feature of all Term life insurance policies allows you to convert a term policy into a permanent life insurance plan (usually Universal Life or Whole Life Insurance) before a certain age. The age you are allowed to convert is set in your contract, and is usually 65 to 70 years old, depending on the insurance company. Before you reach this age you can exercise your conversion right for the entire amount of your life insurance coverage or for a smaller portion of it. This conversion is done without medical evidence, so you are not qualifying again for the insurance coverage. The new permanent insurance policy starts at your attained age at the time you convert, and will reflect a higher premium based on you getting older. This allows you to transition all or a part of your term life insurance, bought mainly for risk protection, into a permanent solution, for tax and estate planning.

Life Insurance Rider (Optional)

Child Term Rider

This insurance rider is available to parents owning a life insurance policy who have minor children. For one flat premium you can insure all children for up to $30,000 of life insurance protection. If you have lots of kids this rider becomes very affordable. When each child reaches maturity, they will have the option to take over personal ownership of this insurance as a personal plan. When the now adult child takes over this Child Term Rider, he/she can get up to 5 or 10 times the amount of insurance their parents bought without medical evidence (maximum multiples depend on the insurance company and the type of policy you have). For instance, your child has developed juvenile diabetes and is no longer insurable but has $30,000 Child Term Rider. He/she could get $150,000 of personal life insurance between the ages of 18 and 25, guaranteed.

Waiver of Premium Rider

This insurance rider is like a small amount of disability insurance on the owner of the life insurance policy. If the owner (often the same person as the life insured, but not always) becomes disabled and can no longer work, the insurance company will pay the monthly premiums for the plan on their behalf until they recover. To exercise this claim, you would have to be disabled totally for 6 months, and continue to pay your premiums during that time. If you are still disabled after 6 months, the insurance company will refund you the entire 6 months of premiums you have paid, and then waive all future premiums until you recover.

Accidental Death & Dismemberment (ADD) Rider

This insurance rider provides additional top up of insurance in case you died or became injured due to an accident. No money would be payable on this rider if death or disability was due to an illness, like cancer. If you have a car accident, fall down the stairs, slip on the ice, etc., your ADD rider would be claimable. It is usually a very inexpensive way to increase your life insurance in case of death by an accident. Also, if you lost limbs, sight, hearing, etc. due to an accident all or a percentage of the benefit would be paid out (depending on the severity of the injury). Usually you can only get an equal amount of ADD as the amount of life insurance you have purchased up to a specified maximum (usually $500,000 with most companies).

Critical Illness Rider

Another way of getting critical illness insurance is to add it to your life insurance policy as an insurance rider. The benefits are that you are not paying a policy fee for a separate critical illness plan and it is usually discount somewhat over a standalone critical illness insurance policy. Most insurance companies offer a critical illness rider on many of their term or permanent life insurance contracts to bundle your benefits into one policy. The critical illness insurance rider can be purchased as a term 10, term 20, term to 75 or term to 100 type of structure. Because the critical illness insurance is attached to a life insurance policy, there is no return of premium on death option, since at death the life insurance will be paying out.

Guaranteed Insurability Option (GIO) Rider

This insurance rider allows the person who’s life is insured on the contract to purchase additional amounts of life insurance in the future without medical evidence. This is very advantageous for parents buying life insurance on their children or young people buying insurance before additional financial obligations like children and a mortgage have come along. Many companies allow the insured person to purchase $50,000 or $100,000 at regular intervals as they age, up to the age of 40 or 45 (depending on the insurance company and the policy you buy). This can often allow a child or young adult to purchase $300,000, $400,000 or $500,000 of additional life insurance protection without providing medical evidence of insurability.

If you would like more information about an insurance rider or benefit please contact Life Guard Insurance.