Life Insurance : Understanding Riders

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A life insurance rider is an add-on provision to an insurance policy that offers additional benefits and coverage to the policyholder at an extra cost. Essentially, riders allow you to customize an insurance policy based on your specific needs.Standard life insurance policies are rigid in that you can't choose much aside from your desired coverage amounts and deductibles. Riders help fill any gaps left in the standard policy, but they each come with their own additional cost.Some of the most common life insurance riders include the accelerated death benefit, long-term care coverage, and term conversion, just to name a few. Adding an accelerated death benefit to your existing life insurance policy allows you to collect part of the policy's death benefit if your life expectancy is cut short due to a terminal illness. Most policyholders see the benefit in this type of rider and are willing to add it to the policy no matter the cost just to have peace of mind.Long-term care coverage is a valuable add-on that protects the policyholder in the event he or she requires long-term care. Specific coverage terms vary by insurance company, but in general, this rider draws funds from the policy's death benefit to pay for the long-term care and pays out the remainder after the policyholder's death.The term conversion rider is important if you can only afford a term life policy now but wish to convert it to a whole policy before the term is up. One of the best things about this rider is that you can transfer a policy to permanent life insurance without having to undergo a medical exam. There is, however, a deadline for when you must convert, so it's important to be financially prepared to pay those whole life deductibles after the conversion.There are also riders available that can help protect your family if the unthinkable should happen. A child protection rider is designed to provide coverage for final expenses at a nominal price if your child should ever pass away. While losing a child may not result in any type of income loss, it's still a devastating event that would pose a hardship for the family.No two policyholders will require the same insurance riders, and you don't even need to add them unless you want to, but it's still nice to know you have options. Choosing the right add-ons can relieve financial strain and emotional burdens precisely when they're needed the most.