Life insurance is a much needed financial tool to protect one’s loved ones and assets in the event of their untimely death.
Being such a large and competitive industry, life insurance has gotten to the point where policies are customizable to fit with the policyholder’s lifestyle and financial situation.
Depending on the life insurance company, and the policy you have, there may be additional policy riders or add-ons that you can purchase to strengthen your coverage.
What is a Life Insurance Rider?
A rider on a life insurance policy is basically an economical way to add extra coverage or features to your policy. Riders are additional benefits you add to your minimum policy.
How Do Riders Affect Life Insurance Policies?
Riders change not only what features your benefit has, but what your regular costs are for premiums. You might pay extra for some riders but the extra cost for the rider is generally lower than the premiums would be for the next highest-class rate or policy type.
It requires less underwriting on behalf of the company to add these features, so it costs you less.
Now, for some seniors, the ability to add these riders to the most basic of life insurance plans, the cheapest, can be a wonderful way to supplement coverage that you already have through an employer.
If you are retired, or near retirement, and you have life insurance from your employer, review whether you can change the coverage.
If you cannot, you might still be able to take out a personal policy that is cheap and simple, but then add these riders to it to boost the total protection you have over your family and assets.
Types of Life Insurance Riders Available
There are dozens of life insurance policy riders available for different policies. In this article, we will address some of the best life insurance riders for seniors in specific.
Let’s take a look at some common life insurance policy riders, what they do, and how much they cost.
9 Best Life Insurance Policy Riders for Seniors
1. Renewable Provision Rider
This is a rider that lets you buy extra insurance coverage within a specifically stated amount of time without having to take another medical exam.
This is the most beneficial if something significant has happened in your life such as a marriage, a birth, an increase in income. If your health deteriorates with age, you can apply for extra coverage using this rider, without having to have the declining health re-evaluated.
This rider also allows term policyholders to renew their policy at the term expiration without undergoing another medical exam. So, for seniors, this is great because statistically, your health deteriorates as you get older and even if you have been diagnosed with higher blood pressure or worsening cholesterol, you will not have to disclose it.
In some cases, this rider expires once you reach a particular age, so it is worth it to consider the cost of adding the rider to a longer-term policy, like a 20 or 30-year policy so that you are more than likely covered until your death.
2. Accelerated Death Benefit
As a senior, depending on your current level of health and your family history of a disease, you might want to seriously consider adding this even to the most basic of life insurance policies.
This lets you use your policy benefit in the event that you are diagnosed with a terminal illness. Naturally, the main benefit here is that you can cash out part of your policy to cover unexpected medical bills after your diagnosis.
For this, insurers typically give out between 25-40% of the policy. They might subtract this amount, and interest, from what is given to your beneficiaries when you pass away.
Most of the time there is a small premium or no premium for this particular rider. There are, of course, different definitions for “terminal illness” for each insurer so look carefully over the requirements before you choose a plan.
3. Accidental Death Rider
If you pass away because of an accident, this rider guarantees that the entire benefit from your policy is paid out. Without it, accidental death—contingent upon when it happened in relation to how long you have had your policy—could result in a much smaller payout from the insurer rather than your whole death benefit.
Most of the time, with the accidental death rider, your family gets twice as much as the policy amount which is why some people call it a “double indemnity” rider as well. This is a good rider because it provides extra income to your loved ones if you are the sole provider.
Now, as a senior, you might not work for much longer but if your retirement is insufficient and you need life insurance to cover the cost of living for your loved ones after you pass, this is still an option worth considering. However, be sure to look over the definitions of “accident” for each company you are considering.
4. Waiver of Premiums Rider
As a senior, certain jobs beget higher safety concerns. Working in a labor-intensive field as a young 20 year old is not nearly as dangerous as a 60 year old.
That said, if you are a senior and you work in a field where disability is a sincere possibility, or if you are near to a disability as it is, you want to consider this rider.
This is a rider that waives all of your future premiums if at any point you become permanently disabled or you lose your income because of an illness.
This is beneficial insofar as you do not have to pay your premiums until such a time as you are able to work again (if there will be a time you can work again) without losing any coverage.
If the main breadwinner is permanently disabled and unable to work, it can be devastating on the rest of the family. The definitions for “disability” vary from one company to the next, so you will want to check the conditions and terms for each company you are considering individually.
5. Long Term Care Rider
If you have to go to a nursing home or get home care later in life, this rider provides you with monthly payments necessary for the long term care costs.
Long term care averages $50,000 annually today, depending on where you live. That cost can be prohibitive if you have to go into long term care because of something like a chronic illness or disability.
Take a look at your finances and keep in mind whether your current retirement/income would be adequate to support long term care, or if it would behoove you to get extra coverage through this rider.
6. Family Income Rider
For seniors who have dependent families and who are sole income earners for their families, this is a good rider to consider for their sake.
This rider gives you family a set amount of income after your death. With traditional policies, the benefit is paid out in a lump sum. For larger coverage policies, this can be a difficult amount of money to manage long term.
The family income rider sets it up so that your dependent family receives a set amount of income for a set number of months. You have control over this so you can decide.
Obviously, in the face of loss and grief, this rider can make it easier for family members to pay regular bills and maintain a standard of living without the added stress of trying to budget and save upwards of $500,000 at once.
7. Child Term Rider
This rider provides a death benefit if your child dies before a specific age.
Once your dependent, underage children reach maturity, you can convert a term insurance policy into a permanent policy and get up to 5 times the amount of coverage without requiring the kids to undergo another medical exam.
This plan is good for seniors who have dependent children or grandchildren still living at home under their care.
8. Spouse Rider
Just like the child term above, the spouse rider lets you add your spouse to your plan. This saves you money as the buyer regardless of age because most insurance is sold “per one thousand dollars”.
This means that it is cheaper to get coverage at $200,000 and use the spouse rider to get your spouse added to your single policy than it is to buy two separate policies of $100,000.
9. Return of Premium Rider
With this rider, you pay a marginal premium and then get that premium returned at the end of the term in full.
So, in the event of your passing, your beneficiaries get the paid premium amount.
Choosing a Policy
As with any policy consideration, you will want to do your homework. Get quotes from at least a dozen providers and compare their riders.
Not all companies have all of the riders mentioned above and even if they do, some companies charge for riders where others do not.
Moreover, pay attention to the riders that have very specific definitions on a company by company basis; work with an agent from each company you are considering to determine what their definitions are before you buy.
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