The most useful life insurance riders

Life insurance riders are benefits you can add to your current policy to increase or limit its coverage. Riders can cause you additional premium payments but involve little underwriting requirements.

The riders that can be available to you when you purchase a policy will vary from one provider to another. What options you can avail of will depend on several factors, your health, age, the type of policy you have, etc.

Hereunder are the nine most useful riders you can add to your policy:

Guaranteed insurability

The benefit this rider provides to you is you need not undergo a medical examination when you buy additional coverage at a future date. As we grow older our health can fail us. We will never know when this could happen. The guaranteed insurability option allows us to prepare for this eventuality and not be worried about having to hurdle a health exam.

This rider can be purchased at given intervals - when you reach a certain age, or over a period of three or so years. When buying this rider, the insurance provider will calculate your premium on the basis of your age and not the state of your health.

Waiver of premium

This option becomes of critical value to a family if the insured individual gets injured or falls ill and becomes disabled permanently. The rider here grants exemption to the insured from having to pay his premiums on the policy until such time he can resume his work. This option is most useful when the premium payments are high.

Consider the absence of such an option and disability strikes - the insurer runs the risk of having a lapsed policy. Different insurance providers will have different definitions of the term "totally disabled" so check first with your company.

Term conversion rider

This option allows for conversion of a term policy into a permanent (universal or whole) life policy without the need for a health examination.

This is a good option to young individuals who can only afford a term policy at the onset but are aiming for a permanent package once their income allows. Be aware though that providers usually impose a deadline as to when the conversion can be carried out.

Accelerated death benefit

A standard option nowadays, this rider allows the insured individual to collect an amount equivalent to a portion of the policy's value when he falls terminally ill and is given only a short period of time to live. For many providers, this rider comes free of charge.

The amount that can be advanced usually falls between twenty five to forty percent of the death benefit and it can be used for a number of purposes like payment of hospital bills and day-to-day expenses.

Disability income

This option allows you to get paid if you suffer from disability and cannot continue working. The money paid out to you can be for a certain time period or for throughout the time you are disabled.

For some providers, they only allow this option for disabilities caused by accidents. For others, both accidents and illnesses are accepted.

Child protection

The early loss of a child can be too much an emotion to bear for any parent. But, it happens and when it does it is one sad event that can also hurt the family financially. With this option, a father or mother need not be worried about related expenses like funeral and burial charges.

This rider is usually available for purchase by units - $1,000, for example. There could be additional underwriting requirements involving the insured child.

Critical illness

This affords the insured a lump amount if he or she gets diagnosed with any of the critical illnesses indicated in the policy. These illnesses may include kidney failure, stroke, heart attack or cancer. What the rider provides is an upfront amount of money, which can be used in relation to treatment.

Accidental death or double indemnity

This option gives the insured an extra benefit that is outside of the regular death benefit stipulated in the policy. For some providers, purchase of this rider can mean extra payment in case the insured person gets dismembered in an accident. Extra money is collected if the person suffers from lost of sight or limb.

To calculate the premium, the insurance company will look at an individual's profession and his hobbies. Understandably, activities that are deemed high-risk like car racing would increase premium prices.

Return of premium

With this option you can get back most or all of what you paid on premiums if you do not die within the term period. In case of your death, your named beneficiaries will get the amount representing how much you have paid up until your demise.

This type of rider comes with a number of variations, hence it is important you check the details.

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