#7 of 12 in the Life Insurance “Checklist For The Real World” series.
Do you need life insurance special options or life insurance riders? Well, it's very situation specific, so you need to talk to your agent/broker about specific riders (they will most likely bring it up during your policy discussions).
Having said that, they definitely provide extra benefits though it's not usually cost effective…
However, here are a few examples of life insurance policy riders. There are a lot more than these, but these are some of the more commonly purchased riders:
Accelerated Death Benefits Rider:
Accelerated death benefits, or living needs or living benefits, provides for the covered terminally ill person to access a portion of their life insurance death benefit while they are still living. These funds can be used for paying medical bills, or for any other need. The amount that used reduces the amount of benefit that is available to the person’s beneficiary when the insured moves on.
Return of Premium Rider:
The return of premium rider provides for the joyful event of the insured surviving to the end of the policy’s term. At that point they will receive back all the premiums they paid.
Waiver of Premium Rider:
This rider can relieve the insured from making premium payments if they become disabled or ill before reaching a certain age and they are not able to afford the policy’s premium payments. With this option, there is usually a waiting period once the illness or disability begins – and the insured must typically provide proof that they are disabled or ill.
If the policy is a permanent plan, even if the insured has stopped paying their premiums, the cash value can continue growing, and / or the policy dividends can continue being paid.
Long-Term Care Rider:
With a long-term care rider, the insured will have funds available for a long-term care or nursing home without having to buy a separate long-term care insurance policy.
Critical Illness Rider:
The critical illness rider provides the insured with a lump sum of cash if diagnosed with a covered disease or illness that is specified in the policy. Examples of these can include stroke, kidney failure, or even cancer. Rather than reimbursing the individual for actual medical expenses like a health insurance policy, this rider will provide funds for the insured to use for any reason that they choose, even if it is not medical in nature.
If you remember why you’re buying life insurance (to cover the FINANCIAL loss in the event of death), policy riders probably won’t make any sense. It's beyond the scope of this checklist to define each rider possible, as there are just about as many riders as there are flavors at a restaurant. Let’s put it this way, riders are like the soda of a fast food “value meal”, the soda is where 75% of the profit is!
Having said that… if you do not have access to a financial planner or someone to help you plan for these “other” potential issues and you fear one of them happening to you, you just may want to look into them.
Life Settlements FAQ – What If I Die Shortly After Selling My Policy?
Life Settlement FAQ – What if I Change My Mind?
Life Settlement FAQ – When Will I Get My Money And From Whom? And What Happens After?
Life Settlement FAQ – Is My Information Private & Confidential?
Life Settlement FAQ – Broker or Provider Representative?
Life Settlement FAQ – Do I have to sell all of my policy?