The terms of your life insurance are spelled out in the policy you sign with your insurer, but you can customize your coverage to suit your unique needs by adding a rider to the document that expands coverage in extraordinary circumstances. These riders typically increase the price of the premium but include extra benefits that generally aren’t covered in a life insurance policy. Here are a few quick tips for understanding how these riders work.
Can Help with Medical Care for Children
Life insurance for children typically isn’t needed because they have no income, but a rider that covers your child in the event of medical care can be a good thing to have. Most child riders’ cost about $5 to $7 a month and help cover costs like unexpected medical bills and funerary expenses in the case of death. Life insurance riders for children can be added to any policy once the child is two weeks old and the coverage ends on their 18th birthday.
Critical for Specific Illnesses
As our bodies age, we develop a higher risk for certain conditions like heart attack, stroke, cancer, or other critical condition. You can attach critical illness riders to your life insurance that will pay out if any of the covered events occurs before the policyholder dies. This amount is usually paid out of the death benefit to cover extra expenses. Most people who add these riders to their life insurance do so because they’re expecting to have a stack of medical bills from a condition that is survivable. In the event of death, the death benefit described in the policy is paid out to beneficiaries minus the amount that is taken by the critical illness rider to cover medical expenses. If you plan on having a critical illness rider on your policy to cover potential medical expenses, you should consider separate burial insurance to cover the cost of your funerary expenses in the event of passing after using a significant amount of your policy to cover medical bills.
Accelerated Death Benefits
The accelerated death benefit rider functions similarly to the critical illness rider, but the illnesses it covers are typically fatal. For those who are eligible for the ADB rider, the money will be paid out before the covered person has died. The ADB is typically included in most life insurance policies at no charge as long as you have a diagnosis from a doctor that says you have a terminal illness. ADB benefits are designed to cover end of life care like hospice, nursing home residency, or hiring a private caretaker for the terminally ill to continue living at home. The ADB is paid out as needed instead of in a lump sum and ADB benefits can claim up to 80% of the death benefit in your life insurance policy.
Disability Income
You must pay premiums to receive the benefits of a life insurance policy, but that may prove hard if you become disabled and cannot work anymore. A disability income rider allows you to waive your premium payments in the event of disability. You will need to obtain proof of your disability from a doctor. Policy offerors all define disability differently, so make sure you understand the terms of this rider before you agree to add it. If your policy does not offer a disability income rider for your life insurance policy, disability insurance is another possibility to help replace income that is lost while you are unable to work due to illness or disability.
