Life Insurance and Benefit riders
Several benefit riders are available today which may be added to a life insurance policy for an additional premium. The following is a listing of some of the more common riders available.
Waiver of premium rider may be added to term life or whole life insurance policies and provides a bit of disability protection. This rider provides that if an insured becomes totally disable for six consecutive months, premiums will be waived for the duration of the disability or until the policy owner/insured reaches age 65. The means that coverage remains in effect even though the policy owner is not paying premiums. The insurer waives premiums which mean they are paying the premium on behalf of disable insurance. In order to qualify for coverage under the rider the policy owner/insured must be totally disabled and under the care of a physician. This means that the insurer will not activate the rider unless it receives proof from a doctor that the policyholder is totally disabled. Therefore, if this rider is purchased and added to the life insurance policy, it will provide a benefit if the policy owner/insured suffers a total disability that lasts for sex months or more.Guaranteed insurability rider may be added to a life insurance policy for an extra premium and permits the insured to purchase more life insurance protection in the future without taking a medical exam. This rider is also known as the guaranteed insurability option or the guaranteed insurability benefit. It allows the insured to purchase additional amounts of life insurance without providing insurability at specified option dates in the future.
How Guaranteed insurability rider work?
- New insurance coverage is provided at standard rates based upon the policy owner/insured’s attained or current age on the option date. If an option is exercised, more insurance is purchased. If the option is not exercised, that particular option is lost. The policy owner or insured must wait until the next option arises, if any, to buy more coverage. Therefore, this benefit rider protects an insured’s future insurability or the individual’s ability to acquire more coverage in the future.
- All insurers function differently regarding this rider. Some make these option dates available every year from the date of purchase up to a specified age such as 50 or 55. Otherwise provide these option dates every two or three years until a specified age for example 65.
- Insurers do not allow guaranteed purchases between option dates. However, exceptions do exist if the insured has recently married, given birth or adopted a child. Insurers will then permit the insured to move up to the next available option date. Therefore, if an individual wises to purchase more insurance in the future without providing insurability, he or she would purchase the guaranteed insurability rider.
Accidental death rider benefit rider may also be attached to a life insurance policy for an additional premium. This benefit is sometimes referred to as multiple indemnity riders and provides an additional face amount of insurance if the insured dies as a result of an accident. Death must occur within 90 days of the accident in order to be covered. The objective of this stipulation is to make sure that the accident is the predominant or primary cause of death. This rider provides an insured with the least expensive type of life insurance protection. However there are some expectations such as:
- Certain causes of death are not covered by this rider such as death resulting from war. Death from non-commercial aviation activities, death where an accident was involved but where illness, disease, or mental infirmity was also involved and it cannot be distinguished with certainty that an accidental cause was primary or death resulting illegal activities. Accidental death or multiple indemnity coverage may be paid for death up to an insured’s age 70. Policies that pay two times the policy face amount are called double indemnity and those that pay three times the death benefit for death due to accidents are called triple indemnity.
Payor benefit rider may be added to a life insurance policy and allows a policy covering a juvenile to remain in force even if the parent accountable for paying the premium dies or becomes totally disabled. The accountable or responsible party could be the parent, guardian or other individual raising the child. The adult purchasing the coverage on the child must possess an insurable interest in the child’s life or they will not be allowed to make such as purchase. This benefit rider may be added for an additional premium and is also referred to as the payor clause.
Juvenile Insurance may be purchased on the life of a juvenile as long as insurable interest is present and as long as unusually large amounts are not purchased. Generally, most juvenile policies are written on children anywhere from both until age 15. Life insurance purchased to cover juveniles I usually purchased for funeral expenses, education expenses or to protect the child’s future insurability. A jumping juvenile policy is a whole life policy, covering a child but owned and paid for by the parent or guardian .When the child reaches age 21, and the parent no longer wishes to pay the premium, the death benefit jumps up to five times it original coverage amount. In addition, the insurer does not increase the premium. This increase in coverage, at no additional cost, provides an incentive to the child, who is not a 21 year old adult, to keep the policy. These policies are sold in small face amounts such as one two or three thousand dollars. Some insurers market these policies as junior estate builders.