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Like most things in life, there’s no one-size-fits-all approach to insurance. With that in mind, a standard insurance policy isn’t always the right fit. That’s where riders come in. Riders let you customize your coverage based on your needs, priorities, and goals. Learn more about insurance riders and some of the most common types in this guide.
An insurance rider is an addition to an existing insurance policy that allows you to add specific insurance products to your basic coverage. It’s also known as an insurance policy provision, amendment, endorsement, or “scheduling of an item.”
Depending on your needs, a rider may expand or restrict coverage. Typically, insurance riders come at an additional cost. You can add an insurance rider to a variety of policies, including:
The first step to purchasing an insurance rider is determining the type of rider you need. For instance, if you’re planning to become pregnant soon, you may want to add a pregnancy rider to your health insurance plan. A pregnancy rider provides additional insurance coverage that can help manage the costs related to prenatal care, labor and delivery, and other expenses. Generally, adding an insurance rider to your existing policy is relatively easy. Riders require minimal underwriting, which lowers the cost of coverage. In addition, riders offer plenty of flexibility — you can purchase a specific type of coverage now and drop it or exchange it later.
You can often choose from a variety of insurance riders, depending on your insurance company and the type of coverage you want. Type of riders include:
Let’s take a closer look at each.
A term conversion rider allows policyholders to convert a term life insurance policy to a permanent policy without undergoing a medical exam.
Term life insurance provides coverage for a certain amount of time, often ranging from 10 to 30 years. After coverage ends, you might not be able to get coverage at the same cost. It may also be difficult to get coverage if you’ve been diagnosed with certain medical conditions. With a term conversion rider, you can lock in permanent coverage while enjoying the lower costs of term coverage for a period of time. These riders tend to be popular among young policyholders who want to save money in the short term while protecting their families in the future.
According to a study from the Administration on Aging, 20% of people age 65 or older will need care for 5 years or longer. Long-term care riders help reduce out-of-pocket expenses by drawing on your life insurance policy’s death benefit.
Unlike a long-term care insurance policy, long-term care riders use the money in your death benefit to pay for expenses. This may reduce the amount of money you or your loved ones have to spend. However, it’ll also reduce the death benefit your dependents inherit after you pass away. In some cases, your long-term care needs can exceed your death benefit, leaving your dependents with nothing to help pay for your final expenses.
With that in mind, a stand-alone long-term care insurance policy may work best for your needs. Consider factors like your financial circumstances and overall health to determine if a long-term care rider or insurance policy is right for you.
An accidental death rider provides your beneficiaries with additional money if you die due to an accident. In most cases, the amount is equal to your existing life insurance death benefit and doubles the amount of money your beneficiaries will receive.
Similar to a term conversion rider, a guaranteed insurability rider lets you purchase additional life insurance coverage or increase your policy’s death benefit in the future without answering health questions or undergoing a medical exam.
A critical illness rider works similarly to a long-term care rider. When you add this rider to your life insurance policy, you can tap into your policy’s death benefit after you’re diagnosed with a qualifying health condition.
To activate your life insurance rider’s benefit, you’ll need proof of diagnosis from your doctor. You’ll then receive a payout from your life insurance company, typically in a single lump sum. You can use the money to pay for medical treatments, transportation, lodging, or other expenses.
Keep in mind that using this money will reduce your life insurance payout. So consider buying a separate critical illness insurance policy to help offset the costs of medical care without impacting your beneficiaries’ payout.
Adding a rider to your current insurance policy is a relatively low-cost way to tailor your coverage to your needs. The cost of an insurance rider depends on the type and amount of coverage you choose to add. However, there’s typically less underwriting involved with riders, which keeps the cost to a minimum.
Insurance riders offer several benefits to policyholders, such as:
Low (or no) deductibles: Insurance riders often come with lower deductibles compared to a basic insurance policy. As a result, your insurance payout may be significantly higher after adding a rider.
Extra savings: You may be able to save money by purchasing an insurance rider instead of an additional insurance policy. Generally, adding additional coverage through a rider costs less per month than the premium on a stand-alone policy.
Customized coverage: Insurance riders allow you to tailor your insurance benefits to suit your needs. Whether you want to expand coverage or restrict benefits, you can make your policy work for you and your family’s needs while supporting your wellbeing now and in the future.
Ultimately, only you can determine if adding an insurance rider to your existing policy is right for you. In some cases, a rider may help you save money by reducing out-of-pocket expenses and monthly premium costs. Riders can also help you customize your insurance plan to get the coverage and benefits you and your loved ones need.
However, there are some instances when an additional insurance policy may be a better fit. For instance, purchasing a stand-alone long-term care policy can cover costs related to ongoing medical treatment without forcing you to pay for care yourself or draw from your death benefit.
No matter what you choose, make sure you consider your goals and priorities. Then, talk to your human resources representative or insurance agent to learn more about the options available to you.
This article is intended to provide general information about insurance. It does not describe any Metropolitan Life Insurance company product or feature.