Unit 5: Life Policy Riders

Return of premium rider

is an increasing term rider; the death benefit always equals the total of premiums paid for the rider and the underlying permanent policy. - does not return the actual premiums but pays an additional term insurance death benefit that equals the amount of premiums paid. - have limited duration and expire at a specified age or after a specified number of years.

Cost of living rider

is based on the Consumer Price Index (CPI). As inflation increases, so does the death benefit of the policy.

Riders

add benefits to a life insurance policy. They customize coverage to fit the insured's needs. Policyowners are charged an additional premium for certain types.

Accelerated Benefits Rider

advances part of the death benefit while insured is still alive.

Guaranteed insurability rider (GIR)

may be attached to a permanent life insurance policy and allows the owner to purchase additional life insurance at specified intervals in the future for certain amounts without having to provide evidence of insurability.

Accidental death benefit rider (ADB)

pays an extra benefit if the insured dies as the result of an accident. - does NOT cover other causes of death like illness, disability, or self-inflicted injury

Other (additional) insured riders

provide convertible term insurance for a spouse or an immediate family member of the primary insured. - often convertible to permanent coverage during the effective period of the rider.

Term insurance rider

provides coverage similar to a term insurance policy however the premium is lower than purchasing a separate policy. - the insured can add term insurance to a permanent insurance policy using this rider - level, decreasing, increasing

Disability income rider

provides the insured with a monthly benefit check if they become disabled.

Waiver of monthly deductions or waiver of cost of insurance

the disability premium waiver for flexible premium policies, such as universal life, suspends the monthly cost of insurance deductions that are made from the cash account instead of waiving the premium payment.

Exchange privilege rider or Substitute insured rider

used to change the insured to a different person.

Payor benefit rider

usually found with juvenile policies. This provision states that if the person responsible for the premiums, for example the child's parents, becomes disabled or dies before the child legally becomes an adult, the rest of the premiums are waived until the child reaches a stated age, usually 18 or 21.

Waver of premium rider

will pay the premiums so the policyholder can continue to have coverage for the duration of the policy.