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Life Insurance Riders Explained

Last modified: Jul 25, 2023

Life insurance is a contract between an insurance provider and a policy owner. The insurance company guarantees to pay a sum of money to the named beneficiaries in exchange for monthly premiums. 

A life insurance policy provides families with a non-taxable amount after the policyholder’s death. From covering burial expenses to paying off debt, life insurance can help the policyholder’s family manage the day-to-day expenses and live a financially secure life. 

Life insurance riders, on the other hand, are optional benefits that the policyholder can add to their life insurance policy.  

This article will shed light on different riders and how they can benefit the policyholder. But, before discussing different riders, let’s talk about what riders are and how they work.  If you are looking for a life insurance policy that is customizable - make sure to check our list of best life insurance companies in the US.  

Life Insurance Riders — Table of Contents

This article will cover such topics:

  • What are life insurance riders? How do they work?
  • Can a policyholder add a rider to an existing life insurance policy? 
  • What is a guaranteed insurability rider, and how does it work?
  • What is a waiver of premium rider?
  • What is a return of a premium rider, and how does it work?
  • What losses does an accidental death rider cover?
  • How does a long-term care rider work?
  • Accelerated death benefit 
  • Child term rider and benefits of adding it to a life insurance policy 
  • Family income rider
  • Spousal insurance rider
  • Term conversion riders 
  • Term insurance riders
  • Disability income riders and their benefits 
  • Cost of living riders
  • Critical or chronic illness riders and differences between chronic illness rider and LTC rider

What Is a Rider on Life Insurance? 

If you plan to buy life insurance, you might have heard the insurance company mention the term “life insurance riders.” Riders are optional benefits added to the life insurance policy, which require additional premium payment. They offer great flexibility, and thus, come with a price. 

You can think of riders as a vital supplement to your life insurance policy. The importance of riders in insurance is that they tailor insurance coverage to meet the policyholder's needs. 

There are various life insurance riders. The most common riders that one can add to their life insurance policy include long-term care rider, child term rider, guaranteed insurability rider, accelerated death rider, and waiver of premium rider.

Can You Add Rider to an Existing Life Insurance Policy? 

You can. However, it’s recommended to buy a rider together with a base life insurance policy. If you decide to add a rider later, you most certainly will be required to go through the underwriting process again and may even need to undergo a medical exam.

Let’s take a look at the most common life insurance riders.

Guaranteed Insurability Rider

A guaranteed insurability rider is one of the most common and popularly added insurance riders. 

What Is a Guaranteed Insurability Rider

The guaranteed insurability rider definition is simple. A guaranteed insurability rider allows you to boost coverage in the future without undergoing a medical exam. 

Is Guaranteed Insurability Rider Free? 

Guaranteed insurability rider is not free at all. You can add this rider to your life insurance policy by paying a higher premium.

What Does a Guaranteed Insurability Rider Provide a Disability Income Policy Owner?

It allows the insured to expand the benefits payable under the life insurance policy without submitting proof of insurability. 

What Is True About a Guaranteed Insurability Option?

When a policyholder buys a guaranteed insurability rider, they have the right to increase their death benefit amount at a future date without undergoing a medical exam.  

Most life insurance policies require the policyholder to take a physical exam. The medical exam helps the insurance company accurately assess risks and set a premium fee that the policyholder has to pay each month in order to receive death benefits. 

When Does a Guaranteed Insurability Rider Allow the Insured to Buy Additional Coverage?

The guaranteed insurability rider lets you increase your coverage on your policy purchase anniversary date every three or five years. 

Waiver of Premium Rider

Waiver of premium is optional and one of the most requested life insurance riders. 

What Is a Waiver of Premium Rider?

It’s an optional insurance policy feature that waives the insurance premium payments if the policyholder is diagnosed with a critical illness or has suffered a disability. With the waiver of premium rider, the benefits remain intact. 

Most people confuse waiver of premium with total permanent disability benefits. The waiver of premium rider waives the premium fee until the policyholder can go back to work. However, a permanent disability benefit applies when a doctor declares you permanently disabled.  

Is a Waiver of Premium Rider Worth It?

Disability waiver of premium rider helps one gain peace of mind. Suppose the policyholder gets disabled due to an accident or is diagnosed with a severe illness. In that case, the rider ensures that paying the premium fee is the last thing the policy owner should worry about. 

What Is the Waiting Period on a Waiver of Premium Rider?

The policy requires a waiting period of six months. 

Return of Premium Rider 

Return of premium rider refunds the life insurance premium payments to the policyholder if they don’t pass away when the policy is in effect. For example, if you have paid a premium fee of $70 a month for ten-year term insurance, you will receive $8,400 if you outlive the policy term. 

The rider typically costs 30% more than a traditional term life policy. Most term life insurance policies have a policy term of 5 to 40 years.  

What Type of Insurance Would Be Used for a Return of a Premium Rider?

Return of premium rider reimburses you for premiums paid if you don’t pass away during the policy term of your term life insurance. 

The rider is also offered to policyholders with disability insurance

Accidental Death Rider 

So, what is an accidental death rider? 

It’s a way of ensuring that your loved ones are financially secure if you pass away in an accident. 

What Does an Accidental Death Rider Do in a Life Insurance Policy?

An accidental death rider is an optional feature offered to policyholders with whole life or term life insurance policies. With this rider, the beneficiary receives a death benefit when the insured passes away due to a covered incident. 

What Incidents Are Covered Under the Accidental Death Rider?

  • Traffic accidents 
  • Falls 
  • Drowning 
  • Loss of limbs and fingers 
  • Homicides 
  • Accidents involving heavy equipment 
  • Loss of speech or sight 
  • Paralysis or coma 

What Is an Accidental Death and Disability Benefit Rider?

The accidental death and disability rider pays the sum assured to the insured if they become permanently or temporarily disabled due to an accident. AD&D covers injuries from accidents and not from natural causes. 

Long-Term Care Rider 

Life insurance with a long-term care rider allows policyholders to access a portion of their death benefit while they’re still alive to pay for long-term care expenses, including costs associated with aging, medical bills, and nursing homes. 

What Effect Does a Long-Term Care Benefit Rider Have on a Life Insurance Policy?

Because beneficiaries receive a percentage of the life insurance policy’s death benefit, it reduces the amount that’s left to the beneficiaries when the policyholder passes away. 

Should I Purchase Life Insurance With a Long-Term Care Rider?

Policyholders who don’t want their loved ones to pay for their medical expenses should consider purchasing life insurance with long-term care.

When a Long-Term Care Rider Is Attached to a Life Insurance Policy, What Amount of the Death Benefit Is Typically Available to Pay for Custodial Care if the Patient Is Not Terminally Ill?

Policyholders with term life insurance policies can usually use up to 50% of their death benefit to pay for their care if they’re terminally ill. 

Is Long-Term Care the Same as Life Insurance?

A life insurance policy pays a death benefit to the named beneficiary after the policyholder passes away. In contrast, life insurance long-term care rider allows policyholders to access some portion of the death benefit to pay for expenses like nursing homes and assisted living services if they can’t live independently on their own. 

Accelerated Death Benefit Rider 

Accelerated death benefit rider definition is simple. It’s a way of receiving a portion of the death benefit when the insured is diagnosed with a terminal illness.

What Is an Accelerated Death Benefit Rider on an Insurance Policy?

Accelerated death benefit rider creates a provision in your life insurance policy that lets you receive a one-time lump sum amount of your death benefit if you are diagnosed with a terminal illness. 

How Does an Accelerated Death Benefit Work?

Usually, with a life insurance policy, beneficiaries receive a death benefit when the insured passes away. However, with an accelerated death benefit, you and your beneficiaries receive a portion of the death benefit before the policyholder’s death. 

For example, suppose the insured has received 50% of the death benefit after getting diagnosed with a terminal illness. In that case, the rest of the death benefit will go to the named beneficiaries when the policyholder passes away. 

Accelerated Death Benefit Rider vs. Chronic Illness

The chronic illness rider allows the insured to access a portion of the death benefit when they are certified by a healthcare practitioner to have a chronic illness with which they are not able to perform any two of the six daily activities or require substantial supervision due to permanent cognitive impairment. 

The six daily activities include:

  • Bathing
  • Continence 
  • Dressing
  • Eating 
  • Toileting
  • Transferring 

Child Term Rider 

What Is a Child Term Rider on a Life Insurance Policy?

The child term rider definition says that if added to an existing life insurance policy, this rider pays a death benefit if the child of the insurer passes away. 

Which Rider Provides Coverage for a Child?

Life insurance child term rider covers the insured’s biological children, legally adopted children, and stepchildren who are at least 15 days old. The rider requires you to pay a flat fee regardless of the number of children you want to cover. 

What Is the Advantage of Adding a Children’s Term Rider to a Life Insurance Policy?

The rider ensures that paying for the funeral costs should be the last thing on parents’ minds after losing one or more children. 

The child term rider conversion feature allows you or the covered children to convert the policy to a permanent policy. Most policies allow you to increase the coverage by five times of the face value coverage of the rider.

Family Income Benefit Rider 

With a family income rider, the named beneficiary receives a payment equal to the policyholder's monthly income if the policyholder passes away. It’s paid out in installments for a specified period. 

Spousal Insurance Riders

The spousal rider allows spouses to have coverage under one policy. 

Keep reading for a deeper explanation. 

What Is a Spouse Insurance Rider?

The spousal insurance rider is an extra feature that provides coverage to you and your spouse under the same policy. It might seem costly, but it’s definitely cheaper than buying a separate life insurance policy. 

Getting term life insurance with a spousal rider might not seem beneficial to many. However, the spousal rider term life insurance is considered useful in situations where one or both partners suffer from a terminal illness because the cost of buying a separate insurance policy increases when the individual suffers from a critical illness or gets older. 

Term Conversion Riders

So, what is the term conversion rider?

A term conversion rider allows policyholders to change their term policy into a permanent one without taking a medical exam. The policyholder can build cash value by converting an existing term life policy to a permanent life insurance policy. 

However, keep in mind that your premium will significantly increase after converting to a permanent life insurance policy. 

Each term conversion rider comes with an expiration date. This means that policyholders have a certain date until which they can convert to a permanent life insurance policy without having to go through underwriting. 

Term Insurance Riders

A term life insurance rider is an additional benefit that can be added to a term life insurance policy. In simple words, a term insurance rider provides the coverage you need for a temporary period. 

Disability Income Riders

With disability income riders, the insured receives a steady source of income if they can no longer work and earn a living due to a disability. Usually, the rider pays the policyholder a monthly income payment of 1% of the face value of the contract and/or also waives the monthly premium fee. 

While discussing disability income riders, it’s also important to mention a partial disability rider definition.

A residual or partial disability rider pays benefits to the policyholder when they become disabled but are still able to perform some of their duties. 

Cost of Living Riders

A cost of living adjustment, also known as COLA, is an add-on feature to an annuity contract that adjusts the amount of your annuity payment annually to help it keep up with an increase in the cost of living. 

Critical or Chronic Illness Riders

It’s a way of receiving a portion of the death benefit when the insured is diagnosed with a critical or chronic illness. 

What Is a Chronic Illness Rider?

The chronic illness rider allows the insured to access a portion of their death benefit if they’re certified by a medical professional to have a chronic illness, which prevents them from performing two out of the six daily activities (toileting, eating, bathing, transferring, dressing, and continence). 

What Is the Difference Between LTC Rider and Chronic Illness Rider?

Life insurance with a chronic illness rider only provides payment if a permanent diagnosis has been made. However, with a long-term care rider, the insured has to show impairment for at least 90 days to access any benefits. 

Is the Chronic Care Rider a Lifetime Insurance Rider?

A chronic care rider is one of the life insurance riders, which allows you to tap into life insurance benefits while you’re still alive and diagnosed with a chronic qualifying condition.

What Is the Difference Between Critical Illness and Chronic Illness?

Even though many chronic diseases can be terminal, some may be controlled and managed with the help of medication and therapy. Chronic illnesses may include diabetes, cancer, dementia, or COPD. 

On the other hand, a critical illness involves a terminal medical condition that leads to death. The example of critical diseases includes heart disease, stroke, advanced-stage Alzheimer’s, or terminal cancer. 

In Conclusion

Life insurance riders are the benefits added to a standard life insurance policy.  These riders allow the policyholders to tailor their base policy to their needs in return for additional premium payments.

Besides, it’s a way of creating a more secure financial protection plan for your loved ones. Whether or not you should add riders to your policy depends on your needs and the type of riders offered. 


What Is a Rider on a Life Insurance Policy?

Riders are the additional benefits that a policyholder can add to their life insurance policy by paying an additional premium fee each month. It’s a way of customizing the life insurance policy. 

Can Term Life Insurance Have Riders?

Yes, you can add riders to term insurance plans. So, make sure you learn about the riders offered with your insurance policy at the time of purchase.

What Are Riders in Insurance Policies?

They are insurance policy provisions that add benefits to an existing life insurance policy. They tailor insurance coverage to your needs and come into play in case of a specific eventuality. Life insurance riders offer better protection and enhanced coverage. 

What Is a Life Insurance Child Rider?

A child rider is a type of life insurance rider that pays out a small death benefit when the covered child passes away. It’s available for children between 15 days old and 18–25 years old (depending on the insurer’s requirements). The rider is generally added to the life insurance policy at the time of purchase. 

What’s the Age Limit for Life Insurance?

The maximum age at which you can purchase a life insurance policy varies from company to company. However, you may only be able to buy a life insurance policy up to the age of 85. Most insurance companies consider people above 85 years old uninsurable

How Long Can a Child Stay on Parents’ Life Insurance?

The child term rider usually covers children until they are 25. However, the coverage period varies among insurance companies. 

What Is Pure Term Life Insurance?

A pure term life insurance policy is a traditional life insurance product that pays a death benefit to the insured’s family if the policyholder dies during the specified term. The policyholder doesn’t get anything if they outlive the policy period. 

What Is a Disability Rider?

The disability income rider is one of the life insurance riders that provides financial protection if the insured can no longer work due to permanent disability.  Please don’t confuse it with the waiver of premium rider. The difference between the disability rider and the waiver of premium rider is that the latter waives the life insurance premium fee only until the insured can get back to work.

What Is a Spouse Rider on Life Insurance?

The spousal rider covers you and your spouse under the same policy. It’s a less expensive option than a separate policy, and it offers coverage in one place for both you and your spouse. The rider will terminate when the base policy ends or a spouse reaches a certain age. 

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