Should you "bling" your life insurance policy with riders or other add-ons?

By Jim Sloan on September 25th, 2010

Swarovski-crusted cell phones and rhinestone embellished jeans probably come to mind when you think of things that have been "blinged." But have you ever thought of blinging something like your life insurance policy? Before dusting off your BeDazzler from 1993 to add plastic gems to the hardcopy of your policy, consider using riders to bling your life insurance policy.

Technically, riders are add-ons to life insurance policies that alter the coverage or terms. Riders can limit or expand coverage, and usually come at an additional premium cost. Here are some typical riders:

  • Accelerated death benefits: This rider is also called a "living benefit" and allows policyholders to receive payments from a life insurance policy before death under certain circumstances. The accelerated death benefit rider allows a policyholder to collect all or some of the death benefit in the event of terminal illness, confinement to a nursing home, the onset of a medically incapacitating illness or other events specified in your policy. Keep in mind that the benefits paid to the insured reduce the death benefit that the beneficiaries receive.
  • Accidental death benefit: Also known as "double indemnity," this rider can double, or in some cases even triple, the policy's face value if the death of the policyholder is accidental. The Idaho Department of Insurance recommends that you carefully read the terms of the rider to review the exclusions. For example, many policies do not cover certain types of accidents, such as those caused by drugs or alcohol.
  • Automatic premium loan riders: This rider ensures that your whole life insurance policy premiums are paid if payment has not been received within the policy's grace period. A policy loan is automatically taken out against the policy's cash value to pay the premium to ensure that the policy stays in force. To work, your policy has to have enough cash value to cover the cost of the premium.
  • Guaranteed insurability: The provisions of this rider allow you to buy additional life insurance, at predetermined periods of time, without having to undergo additional medical exams or underwriting. These riders sometimes allow for additional insurance coverage at certain life events, including marriage or the birth or adoption of a child. Although beneficial, especially if your health has declined, the additional insurance has premium rates based on your attained age.
  • Waiver of premium: This rider allows you to skip premium payments for a period of time--perhaps even for the rest of your life--if you become disabled. After an initial waiting period, the waiver of premium rider keeps your policy in force should you become totally disabled. Typically, total disability is defined by the terms of the rider.

Riders can be a great feature to add to your life insurance policy. But you should carefully consider the cost and benefit of any rider before adding it to your life insurance policy--"blinging" life insurance may not be for everyone.

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