When buying a life insurance policy there are additional protection options you can add to customize it for your needs. When I meet with someone for the first time I ask a lot of questions about them and their needs so that I can make a recommendation to cover all of their liabilities (some they might not be aware of) in one policy. This can save them money and time by having everything covered with one application process and in one policy. Just like Xzibit (I am in no way implying that I am as cool as Xzibit) could turn an ordinary car into a custom, beautiful vehicle designed with the owners personality and taste in mind, you can do the same with your life insurance policy.
Accidental Death and Dismemberment Rider (AD&D)
This rider pays a benefit if you die from the direct result of an accident or dismemberment, which includes loss of the use of certain body parts (including limbs or eyesight.) . The benefit is payable if death happens within one year after the accident while this rider is in effect. This rider will not cover a death that is not the direct result of injuries you sustain. If you die on the operating table as a result of a surgical complication, it does not count as accidental death. Also, suicide or death on a battlefield in military service is not considered an accidental death. Accidental Death and Dismemberment is usually inexpensive and can be purchased on its own and is typically added by someone who works in a dangerous occupation.
Child Protection Rider (CPR)
Child riders are inexpensive and a simple way to get children insured under the age of 25. Typically they are limited to about $20,000 to $30,000 face value and normally can be converted to as much as 5 times the face value of the child rider. The real benefit of this rider is that the child can convert it to an individual policy for themselves without additional underwriting. I typically recommend clients with children to add this rider because it is inexpensive and easy way to insure your children and if they start a universal or whole life policy for their child, it gives a very long time horizon to accumulate a large cash value.
Disability Waiver of Premium
This rider covers the if they are unable to pay the premiums during the time that they are disabled. If the life insurance policy owner becomes disabled typically there is a 90 day waiting period and after that the insurance company will take over the payments during the time you are disabled. Many of the exclusions on this rider are similar to the Accident Death and Dismemberment rider and there are maybe additional underwriting required when you add this rider.
These riders allow you to access a portion of your face value of your policy tax free, without you having to pass away. This Accelerated Death Benefit rider allows you to access up to 50% of the face value of the policy in specific situations. This is considered an advance on the death benefits and is paid tax free.
This rider will provide a portion of the death benefit should you suffer and survive a critical illness such as cancer, coronary bypass surgery, heart attack or stroke. A couple of exclusions of critical illness coverage that you should be aware of is that you must survive past 30 days after diagnosis and no benefits will be paid if you are diagnosed with cancer within the first 90 days that the life insurance policy is issued.
This rider allows you to access 50% of the death benefit if you are diagnosed with terminal illness – defined as having less than 12 months to live.
Long-Term Care Benefits
This rider allows you to convert a portion of the death benefit into long-term care benefits. To access this you need to meet the criteria such as an inability to perform “Activities of Daily Living.”
These are a few of the life insurance riders available to customize your policy around your needs that can help protect you against more than just an unexpected death. Adding riders can also save you money by combining coverage into one policy instead of having several separate policies. When you are purchasing life insurance or you are reviewing your current coverage ask your agent about what riders would make sense in your situation to pimp your policy!
The information is of a general nature only and does not take into account your individual objectives, financial situation or needs. It should not be used, relied upon, or treated as a substitute for specific professional advice. I recommend that you obtain your own independent professional advice (preferably me) before making any decision in relation to your particular requirements or circumstances.