How life insurance riders work

Life insurance riders work by changing the terms or conditions of a policy, either before or after it's issued. Many insurance companies allow you to add riders while quoting life insurance, though whether or not you can do so after buying a policy varies by insurer. Additionally, not all insurance companies offer the same riders, and some may only be available with certain types of life insurance.

What are the benefits of life insurance riders?

Riders make your life insurance policy more flexible either by adding useful features or extending coverage to situations that a standard policy might not allow. For example, an accelerated death benefit rider will let you take some of your death benefit early if you're diagnosed with a terminal illness. With a standard policy, your beneficiaries would only receive your death benefit after you die.

Is it worth adding a rider to my life insurance?

It depends on the type of life insurance rider, as well as what you need from your policy. For example, a waiver of premium disability rider may make sense if you have health issues, as it lets you stop paying your premium if you become permanently disabled or lose income due to an illness. However, adding any sort of rider could increase your premium, perhaps significantly. It's a good idea to quote a policy both with and without the rider you're considering to see how much it changes your price.

Common life insurance riders

Accelerated death benefit rider

Also called a living benefit rider, this rider lets you take an advance on your death benefit money if you're diagnosed with a terminal illness. Your insurance company may subtract the amount you take out from the death benefit your beneficiaries receive upon your death.

  • Is a living benefit rider worth it? The accelerated death benefit may be right for you if you have a history of severe illness. However, some life policies include this benefit without any additional cost. Ask the insurance company if this feature is built into the policy or if you would need to add it as a rider.

Important note: The definition of a terminal illness can vary among insurers. Check what your insurance company covers under this benefit before adding it to your policy.

Critical or chronic illness riders

These are variations of the accelerated death benefit rider that allow you to take out money when you're diagnosed with a critical or chronic illness. A critical illness could include a heart attack, stroke, life-threatening cancer, and others. A chronic illness typically includes any permanent condition that leaves you unable to do two of the six activities of daily living. Using this rider typically reduces the death benefit payout of your policy.

  • Is a chronic illness rider worth it? As with the accelerated death benefit rider, this one may be worth adding if you have a chronic medical condition or a history of severe illness.

Waiver of premium disability rider

This rider waives your policy's premiums if you become disabled or sick and can't work. The conditions for this rider vary by insurer, so make sure to research the qualifications outlined in the policy.

  • Is a waiver of premium disability rider worth it? This rider may be worth having if you don't have a separate disability insurance plan. Many employers offer disability insurance to their employees, so you may already be covered. Double-check your current plans before adding this benefit to your policy.

Return of premium rider

This benefit refunds your term life insurance premiums at the end of your policy's term. So long as the death benefit isn't paid out, you get all of your premium dollars back.

  • Is a return of premium rider worth it? It may depend on your investment strategy. By paying extra premium for this rider, you can get your money back after the policy expires. On the other hand, you could make more money over the same period of time by investing that extra premium elsewhere. Of course, there are many factors at play with any long-term investment. Consult a financial advisor if you're considering this rider.

Family income benefit rider

This rider adds an additional death benefit to your policy that's paid out in monthly installments, rather than one lump sum. This way, your family has a steady source of income to replace your own.

  • Is a family income benefit rider worth it? If you're not sure your beneficiaries will be able to manage a lump sum of money, then you should consider a family income rider. It's also a good idea if your family would struggle financially without your income.

Term life insurance rider

A term life insurance rider allows you to purchase term life coverage on top of a permanent life insurance policy, giving you extra coverage for a set period of time.

  • Is a term life insurance rider worth it? If you have young kids and want to give them more protection until they're out of the house, then this rider could save you money in the short and long term. Since a term life policy costs less than whole or universal life insurance, you would end up paying less for the extra coverage than if you were to add it to your base policy.

Term conversion life insurance rider

With a term conversion rider, you can convert your term life policy into a whole life policy near or at the end of the term.

  • Is a term conversion rider worth it? Maybe. Converting a term life policy into a whole life policy may be cheaper than buying a new term policy once you're at retirement age. Plus, you typically don't need a new medical exam to convert an existing life policy with this rider.

Less common life insurance riders

Child insurance rider

This rider provides a small death benefit in the event of a child's death to cover medical bills and funeral expenses.

  • Is a child insurance rider worth it? While difficult to think about, adding a child insurance rider can help you avoid financial stress if the unimaginable happens. Consider buying this rider if you're not sure you could pay for a funeral or afford to take time off work.

Spouse life insurance rider

This rider is essentially a life insurance policy for your spouse that pays out in the event of their death.

  • Is a spouse life insurance rider worth it? It might be worth looking into if your spouse can't get an affordable policy on their own. However, this rider may provide less protection compared to what they could get with a regular life insurance policy.

Guaranteed insurability rider

A guaranteed insurability rider allows you to add more coverage to your policy without a medical exam, typically during stated time periods. Note that this rider is usually only available with a whole or universal life insurance policy.

  • Is a guaranteed insurability rider worth it? This rider can be beneficial if you're younger, since it allows you to easily bump up your coverage after certain life events, such as the birth of a child or a promotion.

Cost of living rider

This benefit gradually increases your policy's coverage over time in step with the Consumer Price Index so that the value of your policy doesn't erode due to inflation. Bear in mind, your premium will also increase alongside your coverage amount.

  • Is a cost of living rider worth it? If you're young, this rider might be worth having if you're worried about the long-term value of your policy. Though you could also get around inflation by adding more coverage yourself as time goes on, such as through a guaranteed insurability rider.

Accidental death benefit rider

This rider increases your death benefit payout if your death is caused by a covered accident.

  • Is an accidental death benefit rider worth it? If you have a high-risk occupation, then it may be worth considering an accidental death rider to give your family even more financial support if you were to die unexpectedly.

Long-term care rider

This rider adds long-term care insurance to your life policy, which can help pay for in-home care, medical equipment, and other health care costs associated with aging. Note that your policy's death benefit may be reduced if you use this rider.

  • Is a long-term care rider worth it? If you're concerned about paying for in-home care and other related expenses, then this rider is worth looking at. It could take the place of a stand-alone long-term care policy, though you should compare the coverage and cost of this rider against a separate policy to see which is a better fit for you.