Posted by When we deal with life insurance companies or brokers, we often hear the word "Rider".There will also be a part of Rider in the policy contract.What exactly does "Rider" often see in life insurance contracts mean?What is its use for policyholders?Do I need to spend extra money?Today, the American Life Insurance Guide will answer them one by one.
A Rider?
What is Rider?
Rider in a life insurance contract refers toAttached contract,oradditional terms.
For example, the "premium reduction and exemption" function, which is almost necessary for most insurance policies on the market, or the very popular "pre-life benefits" function, are all used as separate additional clauses and added to the life insurance contract to take effect, becoming a commitment of the insurance company. .
To make an image metaphor, the relationship between life insurance and additional terms is like patronizing a steak restaurant. You can’t just order a steak, but you have to order the matching dishes and sauces. This steak will make you satisfied when you enjoy .Here, life insurance is like the main course steak, and various optional side contracts are like side dishes and sauces.By selecting and confirming different additional terms, similar to the customization process, you can match the insurance policy that best suits your needs.
Picture: Rider list in the policy contract
The role of Rider
The role of Rider is to give the original insurance policy with only basic functions, more additional options and benefits.These options and benefits include: the right to increase or decrease or decrease the insured amount, the right to withdraw premiums in advance, andTerm life insuranceThe right to convert the policy into a whole life insurance policy, etc.As a side dish, Rider also needs to be purchased. The more Rider you choose, the more you may have to pay for these additional benefits.In general, the additional cost will not be too high.Many Riders are also free.
How to choose your Rider
In the issued life insurance policy, each Rider will have a detailed introduction.The original intention of each Rider is to enhance the function of the insurance policy.The following are the common types of Riders in life insurance policies:
If you may experience a disability
1. Premium waiver (Waiver of premium rider)
By choosing this Rider, when you are unfortunately disabled and unable to work, this clause is used to protect you from continuing to pay premiums in this case.This Rider clause is usually invalidated when a person’s retirement age, which is between 60 and 65, expires.
2. Disability income rider
When you are completely disabled and unable to work, the insurance company has to pay a regular sum of money as your regular income.At the same time, this additional clause will specify the size of the payment amount, or determine in advance whether to make a fixed payment within a specified period of time or to make the payment throughout the disability period.
Some disability income Rider clauses only stipulate income compensation for disability caused by accidents, while some insurance companies provide fixed income compensation for disability caused by accidents and illnesses.
If you want more protection in the future
3. Guaranteed insurability rider
This additional clause guarantees that for a period of time in the future, the insured will be able to invest more premiums to purchase more additional insurance coverage without the need for medical examinations (without providing any insurable evidence).
Its advantage is that, because you know that your health is changing at any time, you know how much the risk becomes.Under the protection of this additional clause, usually every few years, such as 3 years, your health has undergone tremendous changes, and then you want to continue to increase the amount of insurance. At this time, you can increase according to the requirements of the Rider. Large insurance coverage.At this time, the life insurance company will set a new premium based on your age, and will not set a new premium based on the factor of health.
If there is heart disease or cancer, the insurance company may directly refuse the insurance.But with the existence of this rider, if the insured is healthy when purchasing the policy, he may get more coverage protection for later heart disease or cancer.
If you consider converting term life insurance into whole life insurance in the future
4. Term conversion rider
Term life insuranceUsually only cover 10 years, 15 years, or 20 years.andParticipating Whole Life Insurance和Universal insurance, It is guaranteed for life, so whenever you die, your beneficiaries will receive a compensation.
This clause allows you to convert from a term life insurance to a lifetime type product without the need for a medical examination.This clause is more beneficial to young people who have just entered the workplace and newly established young families, because at this time, they have a small budget, and term life insurance costs are cheap, and lifetime life insurance costs are relatively expensive.
If you want to switch to an insurance policy, you don’t want to switch it. There is usually a deadline for the switch.The specific transfer method is slightly different according to the content of the supplementary clause of each insurance company, and you can learn more about it when choosing this policy.
If in order to deal with serious diseases in the future
5. Advance payment of insurance amount clause (Accelerated death benefit rider)
This clause has basically become a must-have standard clause in the life insurance industry, and it is usually free.
If you are diagnosed with a major illness or terminal illness and have only 12 months or 24 months of life, the Rider allows you to withdraw part of the death compensation in advance.The Rider claims of different insurance companies mainly focus on different definitions of the survival period of this life. Up to now, the US insurance industry generally pays early compensation for critically ill patients with a survival period of 12 months.
Although this Rider is free from most insurance companies, there may be a processing fee when the actual withdrawal is made.This money is at your disposal.
6. Critical illness rider
If you are diagnosed with a condition that is clearly included in the policy, such as cancer, heart pen, stroke, renal function decline or other major diseases, the insurance company will pay you a large sum of cash compensation.The practice of the U.S. health insurance industry isReimbursement of your medical expenses, 而life insuranceKarma’s approach isDirect cash paymentUsed to pay for some expenses in the treatment process.
In 2015, there were also insurance companies in the U.S. that were separated and launched separately on this basis.Critical injury rider (Critical injury rider)When a certain degree of coma, paralysis, severe burns and traumatic brain injury occurs, the insurance company directly pays the compensation.
In response to unexpected changes in the family
7. Child protection rider
We are well aware that it is slightly offensive when talking about the possibility of losing a child suddenly.But we hope to put emotions aside to explain the function of this Rider.
Although the sudden loss of underage children will not lead to loss of income, such tragedies will still lead to some financial consequences and make families who have lost their loved ones worse.This clause (more common in term life insurance) provides for the final funeral expenses for families who have lost a loved one in this case.
Responding to unexpected situations
8. Accidental death benefit rider
If you die in an accident, this Rider will provide additional compensation on top of the regular death compensation.When the amount of additional compensation is similar to the amount of death compensation, this constitutes a double compensation.Some such riders also compensate for physical disabilities. For example, when you lose a part of your torso or become blind, the insurance company will compensate according to such riders.However, when applying for insurance, the insurance company will evaluate the premium based on whether you are engaged in high-risk activities or such hobbies.
Plan ahead for retirement and medical care after old age
9. Long Term Care Rider
Long-term care clauses, usually referred to as LTC Rider, are used to provide long-term care expenses to policyholders.When the insured is unable to provide daily care for himself, he can rely on this clause and ask the insurance company to apply for payment.In many cases, this is a regular monthly payment, and the amount of payment is usually not considered inflation.
Final Thoughts
There is no complete answer as to which Rider is right for you.When purchasing life insurance, what Rider puts in your life insurance basket, you also need to refer to the cost, function and other characteristics.But the basic suggestion is that Rider, which is free or very low-cost, generally needs to be added.At the same time, and professionallyLife Insurance Financial AdvisorDiscussing with an analyst to confirm your actual needs is also a very important step. (full text)
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