A whole life insurance policy is a type of permanent life insurance that pays out a death benefit and guarantees cash value growth. You can add an insurance rider of your choice to your life insurance policy to change a part of it or give it more features.
In this article, you will learn what a rider is and how much it costs. Also, we’ve included 13 common life insurance riders, and we will describe each of these one-by-one.
What is an Insurance Rider?
Riders are benefits that you can add to your life insurance policy. This allows you to customize the life insurance policies and make them fit your lifestyle.
How Much Does it Cost to Add an Insurance Rider?
The prices of insurance riders vary, depending on their purpose and how much extra coverage they provide. The extra cost is unavoidable, so it is best to check the price with the insurance company before you add a life insurance rider.
The more riders you buy, the more expensive a policy’s premium gets. However, the good news is that you usually need no more than three life insurance riders, and you can remove some of them as time passes and your cash value grows.
13 Common Life Insurance Riders
There are a large number of whole life insurance riders, but we’ve selected 13 that you can find at almost any insurance company.
Paid-Up Additions Rider
A paid-up additions rider (PUA) maximizes the cash value growth of your whole life insurance policy, and it is only available for whole life insurance. Most life insurance premiums are directed toward the cash values instead of the death benefit.
With a small additional cost, you can have this rider attached to the whole life insurance policy and start overfunding it. Once you learn how to capitalize on PUA, you can see the true value of life insurance when it is used as a vehicle for generating cash.
Return of Premium Rider
A return of premium rider comes under many different names, but it essentially offers you the return of the premiums at the end of the term. If the policyholder dies, your designated beneficiaries will get paid the premium amount.
Long-Term Care (LTC) Rider
Long-term care can be purchased independently, but if you already have an existing policy, you can bump it up with the long-term care rider.
A long-term care rider will provide the insured with monthly payments if they need to go to a nursing home or receive care. With long-term care, you can save money on unnecessary expenses, and if you already have a life insurance policy, there’s no reason to get this separately.
Child-Term Rider
With a child-term rider, you will receive an additional life insurance death benefit if a child dies before a certain age.
Although nothing can bring comfort in these difficult times, having additional coverage in your permanent policy is something you have to consider, especially if you have a history of illness in your family.
Guaranteed Insurability Rider
With a guaranteed insurability rider, you will be able to get additional insurance coverage without the need to complete a medical exam or answer additional health questions.
This rider is great for everyone who is growing older and who has grown through a massive change in their life. If you feel that you are under a lot of stress and that your health may have declined in recent years, you can consider adding guaranteed insurability riders to your policy.
Accidental Death Rider
One of the main reasons people buy life insurance policies is for the death benefit. Securing your family is important, and if you are the sole provider for your family, you should definitely consider an accidental death rider.
With the accidental death rider, an additional benefit is paid to the family members if the policyholder dies in an accident. They will receive double the amount of the original death benefit, which is why this insurance rider is also known as a double indemnity rider.
Although doubling the amount of the policy’s death benefit sounds appealing, you should check with your life insurance company about what they consider an accident before you purchase this rider. You’ll quickly realize that doubled death benefits are only paid in very specific circumstances.
Accelerated Death Benefit Rider
With an accelerated death benefit rider, if the insured is diagnosed with a terminal illness, the death benefit can be used right away. They can use that money to cover other expenses and medical care.
The accelerated death benefit rider is a cost-effective way to protect yourself from a terminal illness because it costs almost nothing to attach this rider to your whole life policy. Because you use parts of your death benefit during your lifetime, the insurers will most likely subtract that amount plus the interest when they pay off your beneficiaries.
Check with your insurer to see what they consider a life-threatening illness, as you will get different lists from each company.
Waiver of Premium Rider
Another useful rider is the waiver of premium rider. With the waiver of premium rider, future premiums are waived if the policyholder becomes permanently disabled and loses his income due to injury prior to a certain age.
You only proceed to pay premiums once you are capable of working again and regaining your income. Sounds good?
Like the accidental death rider, you have to be careful about what “totally disabled” actually means and under what circumstances the insurance provider will activate this rider. It is best to check with the insurer before you continue with the purchase.
Family Income Benefit Rider
If you are the sole breadwinner, you will not require additional riders, as the family income benefit rider can come in handy. In the event of the insured’s death, the family members will receive monthly payments from this rider along with the death benefit.
Having this rider will make the lives of your family members easier, and all you have to do is determine the number of months or years your family will receive this extra benefit.
Term Life Insurance Rider
A term life insurance policy has a certain duration, after which it expires. There is also a term life insurance rider, which functions just like the policy. You can add a term life insurance rider to your permanent life insurance policies to increase the death benefit for a specific time period.
Your policy still gives you permanent coverage, but for a few years, you can have an increased death benefit with this specific rider. Most likely, you will not be able to add this rider to the policy you already own, but if you are thinking about getting new life insurance coverage, you can consider this option. It is cheaper than getting the term life insurance separately.
Similar to this, you can also find term conversion riders that allow you to convert your term life insurance into permanent life insurance.
Estate Protection Rider
If the death benefits go to your estate rather than specific family members, you can use this rider to help offset the estate taxes.
This is not a common rider, so consider the rider’s cost and see if it is worth adding it to your whole-life policy. There are other life insurance riders that are more valuable, but this is another option you may come across.
Overloan Protection Rider
When you take loans from the insurer, you use your cash value as collateral. If you decide not to pay off those loans, the insurer will use the cash from your policy value to pay them off. Take out too many loans without paying them off, and you may be in a tricky situation.
With an overloan protection rider, you can ensure that your policy doesn’t lapse if you take too many loans. Although this may seem like a useful rider to have for those who will use whole-life insurance as their investment vehicle, we simply advise you to be responsible with loans instead of wasting money on a rider such as this one.
Spouse Life Insurance Rider
Instead of taking out a separate policy for your spouse, you can add the spouse life insurance rider and cover two people for a smaller amount.
Although this sounds intuitive to do and not pay an additional premium, you will see why you can have multiple whole life insurance policies, especially if you want to take ownership of your lifestyle.
Additional insurance, in this case, allows you to get more loans and earn even more money through a banking system we are about to show you!
Which Life Insurance Riders Should You Get?
If you have an existing life insurance policy, you might not be able to attach all the riders that you want. On the other hand, if you are getting new insurance, you have an abundance of choice.
The quality of the riders you select depends only on your needs. Most of these can be good additions, and now that you know what each of them does, you will be able to make an informed decision and boost your insurance policy with the right riders for whole life insurance.
The only one required is the paid-up additions rider!
The value greatly exceeds the insurance rider cost. It lets you overfund your insurance policy and access the money much more quickly instead of waiting for a few years to accumulate.
You will use the overfunded whole life insurance policy to build your private banking system and fund your lifestyle!
How?
Final Thoughts
Join our community of like-minded people to learn about lifestyle ownership and how to use whole life insurance with paid-up additions riders.
But the first step to taking your lifestyle into your own hands is to gain more knowledge about finances, policies and banking. Good luck!