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Life Insurance Resource Center

Optional Riders/Supplemental Benefits

At the time you purchase a life insurance policy certain supplemental benefits are available to you. Usually the addition of a rider is reflected in an additional charge by the company and may require that the insured provide evidence of insurability. Some of the more important riders to add are:

Waiver of Premium  Waiver of premium provides that your policy will be kept in force by the company, without further payment of premiums, if you become totally disabled before age 60 or 65, after an initial waiting period. Total disability will be defined by the terms of the rider. Premiums are waived as long as your disability continues and policy benefits including cash values and dividends (where payable) continue just as if you had paid the premiums. This coverage is really a disability benefit and is both worthwhile and inexpensive.

Automatic Premium Loan Provision   This provision provides that at the end of the grace period, if the premium due has not been paid, a policy loan will automatically be made from the policy’s cash value to pay the premium. This helps to prevent an unintentional lapse in the policy. This provision is often recommended because of the numerous circumstances when a premium payment may have inadvertently gone unpaid. The value of the cash surrender must at least equal the loan amount plus a year of interest. This provision must be elected by the policyowner and can be cancelled at any time by the policyowner.

Waiver of Mortality Deduction Charges   The waiver of mortality deduction charges operates in the same manner as the waiver of premium benefit above except that it is offered with flexible premium universal life type policies.

Disability Income Disability income provides a monthly income while you are totally disabled after an initial waiting period. The monthly disability income benefit is limited to a percentage of the death benefit.

Accidental Death Benefit  The accidental death benefit provision provides an additional amount of insurance in the event that death of the insured occurs by accident. Some accidental death benefits will provide for two or three times the face amount of the policy for specified types of accidents. The accidental death must occur prior to a specified age, such as 65. Among other exclusions, death due to sickness is excluded.

Guaranteed Insurability  The guaranteed insurability rider gives you the option to buy a stated amount of additional insurance at specified intervals up to a maximum age, usually 40, without presenting evidence of insurability. Such riders will also provide alternate dates to obtain additional insurance such as the date of marriage, the birth or adoption of a child when you need for insurance coverage may increase. This rider guarantees you the option of buying additional coverage regardless of the state of your health at the time you request the additional insurance at premium rates based on your attained age.

Cost of Living Rider  The cost of living rider enables you to purchase more insurance each year to help offset increasing insurance needs due to inflation. The amount that can be purchased is based on increases in the cost of living index. This additional coverage is usually available at low rates and evidence of insurability need not be provided for such increases.

Payor Benefit Rider  A rider may be added to the policy of a juvenile stating that if the payor (the one paying the premium) dies or becomes totally disabled prior to the juvenile’s reaching majority, the subsequent premiums due are automatically waived.

Spouse Rider  This type of rider will provide level term coverage on the life of the insurer’s spouse. Such rider will also provide a conversion provision permitting the spouse to convert to permanent coverage without evidence of insurability prior to the termination of the rider or upon the death of the insured under the basic policy.

Children’s Rider  This type of rider will generally provide level term coverage on the life of your children. Such riders are usually offered at one premium rate and may cover newborns and adopted children who can be added to the coverage without increasing the premium you pay. The rider will also provide a conversion provision, which will permit each child to convert to a permanent plan of coverage without evidence of insurability prior to the termination of the rider or upon the death of the insured under the basic policy.

Term Riders  Term riders provide temporary coverage which may be attached to an existing permanent policy or interest sensitive policy to provide an amount of extra insurance protection for a fixed period of time. These types of riders are useful if you need more insurance or a decreasing amount of coverage for a limited period.

Next Topic: Consumer Guide to Annuity Products in New York (PDF)

Updated 08/13/2009