Chapter 5- Life Insurance Riders

Qualifying event for Accelerated Benefits Rider

-terminal illness (24 month expectancy) -serious illness that could reduce life expectancy -Long term care -hospice or permanent nursing care -catastrophic illness requiring extraordinary treatment

Life Insurance Riders

Benefit Options to tailor a policy to the owner's needs

Accidental Death Benefit

Extra benefit if insured dies because of an accident dies within 90 days as a result of an accident- doubles or triples the face amount (called double or triple indemnity) Does not cover: illness, disability, or self-inflicted injury, war, commission of crimes, aviation activities other than a commercial flight Expires at 60 or 65

Long- Term Care Rider

advance of death benefit while insured is living to pay for things such as home care

Guaranteed Insurability (Rider/ Option/ Benefit)

allows owner to purchase additional life insurance at specified intervals in the future with no further evidence of insurability typically can be exercised between ages 25 & 40 at 3 year intervals or a life event such as marriage, birth, or adoption

Cost of Living Rider

based on consumer price index- basically you get death benefit increases with economic inflation but will not decrease Premium for the additional coverage based on attained age

Other (additional ) insured riders

convertible term insurance for certain non-family members such as business associates

Family Rider

covers both the insured's spouse and children

Capital Sum Accidental Death and Dismemberment

dismemberment benefit- 50% of the principle sum

Accelerated Benefits Rider

enables policyowner to apply for an advance on the death proceeds during the lifetime of the insured in some severe cases Requires Qualifying events Range from 25-100% of death benefit Disclosure of effects is required

Waiver of Premium

if policyholder becomes disabled and unable to work for a period of time the waiver or premium rider will pay the premiums so the policyholder can continue to have coverage- 90-180 day waiting period Cash value continues to grow as it would if the premium was being paid Expires between 60 and 65 - but if permanently disabled before than, it can be active for life

Return of Premium Rider

increasing term insurance rider, amount of rider equal to all premiums paid, death must occur while rider is in force

Term Insurance Rider

insured can add term insurance to a permanent insurance policy using the term insurance provider- cover is similar to a term policy the premium is just cheaper than doing a separate policy altogether Three term riders: level, decreasing, and increasing Expires at and age or number of years

Waiver of Monthly Deductions/ Waiver of Cost of Insurance

like waiver of premium but for flexible premium policies such as universal life- 3 to 6 month waiting period Cash value continues to grow based on interest

Spouse Rider or Children's Rider

provide convertible term insurance for spouse or child of primary insured- called

Disability Income Rider

provides insured with monthly benefit check if they become disabled- typically 1% of the face value of the policy the length of payments depends on the definition of disability in the rider Cash value continues to grow and if it pays dividends, they continue to pay

Accidental Death and Dismemberment

similar to ADB however also provides a benefit to the insured in the case that insured lives after suffering severe dismemberment which would be 50% of the death benefit per lost limb up to 100% but not more than also includes loss of sight, hearing, and paralysis

Exchange Privilege Rider

substitute insured rider- used to change the insured to a different person- usually used by businesses when the policy is on a key employee and they retire or leaves the company- new insured must provide proof of insurability Premiums change based on new insured

Principle Sum on Accidental Death and Dismemberment

the amount of the rider and 100% of the death benefit- paid upon accidental death of insured

Payor Benefit Rider

typical on juvenile policies Pays premiums if the adult payor dies/ becomes disabled until the child reaches a certain age this requires evidence of insurability of the payor that would not be needed for a regular juvenile policy