Common Life Insurance Riders (What Do They Cost? Who Should Buy Them?)

You might be wondering, “What is a life insurance rider?”

A life insurance rider is an add-on to your basic life insurance policy — additional coverages that give you added protection. 

Let’s think of it like this. Imagine you’re buying a new car. 

Automatically the new vehicle comes with standard features like a radio, upholstered seats, and air conditioning. 

If you want, though, you can add extra features to your car, like heated leather seats, tinted windows, a higher-end stereo, or an internal GPS. You have to pay to add extra features. And generally, you can pick and choose which features matter most to you. 

It’s the same with life insurance. 

Beyond paying a financial sum to your loved ones upon your death, life insurance policies have optional riders that you can add to your policy. These will offer additional protection for your loved ones.

In this article, we’ll dive into the eight most common life insurance riders, explaining what they offer, how much they cost, and how to determine if you should add the rider to your policy. 

1. Accelerated Death Benefit
2. Accidental Death and Dismemberment Benefit
3. Child Protection Rider
4. Critical Illness Rider
5. Long Term Care Rider
6. Return of Premium Rider
7. Term Conversion Rider
8. Waiver of Premium Rider

#1 Accelerated Death Benefit

The Accelerated Death Benefit rider provides a portion of the death benefit to be paid out in the case of an imminent terminal illness. The policyholder takes out “cash advances” on the benefit that will be paid out upon their death.

This rider is only paid out under very specific circumstances outlined by the insurance company. A doctor has to fill out paperwork attesting to the severity of the terminal illness and the imminence of death.

How much does it cost to add an Accelerate Death Benefit rider to a life insurance policy?

Usually, it costs nothing to add this to your policy. With an extra signature on your application, you can let the insurance company know you want to add this rider to your policy. 

Do I need to add an Accelerated Death Benefit Rider to my policy?

Because it costs nothing, adding it to your policy is a great idea! This can protect you and your family by providing them with the financial means to pay medical bills and living expenses if you find yourself with a terminal illness.  

#2 Accidental Death and Dismemberment Benefit

The Accidental Death and Dismemberment Benefit pays out additional compensation — up to the total amount of the death benefit — if you pass away or lose a limb because of an accident.

What is meant by accidental death?

An accidental death or dismemberment would be anything that is not a natural cause – like a car accident or work accident. 

When you add Accidental Death and Dismemberment to your policy, you determine the benefit amount. Usually, you can request a benefit amount up to the death benefit amount of your life insurance policy.

I should note, however, that insurance companies rarely pay out this rider. Insurance companies have very specific restrictions regarding the payment of this benefit. 

How much does it cost to add the Accidental Death and Dismemberment Benefit?

The cost to add Accidental Death and Dismemberment Benefit will depend on how much coverage you want to add to your policy. 

For instance, a $50,000 accidental death or dismemberment benefit would likely cost around $5 a month on your policy.

Do I need to add Accidental Death and Dismemberment to my policy?

Unless you have a high-risk job or vocation, it’s usually not worth the extra cost to add this rider to your policy. This is especially true when you consider that insurance companies rarely pay out this rider due to restrictions written into it.

#3 Child Protection Rider

It’s terrible to think of a child passing away. But when it happens, parents have to pay significant amounts for funeral and burial costs. 

The average cost of a funeral is between $6,000 for cremation and $12,000 for embalming, a casket, and other preparation. These costs do not include purchasing a cemetery plot, a monument or marker, or other items such as flowers.

Many families simply don’t have the finances on hand to pay those kinds of expenses.

Along with funeral and burial costs, many parents also need time off of work to grieve the loss of their child. That time off often results in lost wages.

A child protection rider can be added to your life insurance policy to provide a death benefit if your child passes away. This benefit can help pay for funeral costs and provide financial support if you take time off to grieve your loss.

By adding this rider, each of your children age 25 and younger will be covered with the same death benefit amount. 

Here’s how it practically works. Let’s say you purchase a child protection rider with a $10,000 benefit amount for an additional $5 per month. For only $5 each month, each of your children will be covered with a $10,000 death benefit. 

If one of your children dies unexpectedly, your policy will pay you $10,000. If more than one of your children dies unexpectedly, it will pay you $10,000 for each child that passed away. 

How much does it cost to add a Child Protection Rider?

The cost to add a child protection rider will depend on the benefit amount you desire.

For instance, adding a $10,000 death benefit for the death of a child will likely cost around $5 per month. If you want to add a $20,000 death benefit, you will pay approximately $10 per month. 

Do I need to add a Child Protection Rider to my policy?

If you can afford the additional expense, you should definitely add this rider. This rider offers helpful protection for any parent with children under the age of 25. 

For as little as $5 or $10 a month, you can have the peace of mind that this rider will cover some of the financial burden you would face if the unthinkable happens.

#4 Critical Illness Rider

When you add a Critical Illness Rider to your policy, the insurance company will pay a lump sum to you if you are diagnosed with a critical illness. 

A critical illness includes:

• Heart attack
• Cancer
• Stroke
• Kidney failure
• Coma

This lump sum of money is paid out upon the diagnosis of your illness. A medical professional will need to sign off on the severity of your diagnosis.

How much does it cost to add a Critical Illness Rider?

The cost to add a Critical Illness Rider to your policy depends on both your insurance company and the type of policy you are purchasing. 

Usually, a Critical Illness Rider is very affordable. And with whole life insurance policies, it is often added without any extra cost. 

Do I need to add a Critical Illness Rider to my policy?

Adding a Critical Illness Rider can provide you with the extra financial resources you need at a time when you are most vulnerable. If you can afford to add it to your policy, I would highly recommend it. 

And because it is typically offered on whole life insurance policies for free, you should certainly take advantage of this added protection.

#5 Disability Income Rider/Long-term Care Rider

Adding a disability income rider or long-term care rider to your policy will provide you with a monthly stipend to replace part of your income if you become disabled and cannot work. 

If you add this to your policy, you should remember that the payout is usually too low to replace your income fully. If you are concerned about being financially secure if you become disabled, a better option is purchasing a stand-alone disability insurance policy.

How much does it cost to add a Disability Income Rider or Long-term Care Rider?

The cost of adding a disability or long-term care rider depends on many factors, including occupation, age, medical history, and gender.

The affordability of this rider is determined on a case-by-case basis. For some individuals, it might be affordable, while for others, it may be very costly to add this rider. 

Receiving Payments

The cost of a long-term care rider will also be heavily affected by when you determine you want the policy to begin paying out after becoming disabled. If you choose to have the policy start paying as soon as you become disabled, you will pay significantly more than if you want the payments to begin after being disabled for 180 days. 

Profession

Your profession will also impact your premium amounts. A less risky job like insurance or banking will result in a lower premium cost. A more risky career like factory work or truck driving will result in a higher premium cost.

Some professions do not qualify for life insurance at all. Individuals with 0ccupations like police work or fire fighting may not be able to obtain a life insurance policy.

Your profession can also impact how long the insurance company will make disability payments to you. A less risky job may be able to receive payments until the individual turns a certain age or until death. A more risky profession may only be able to receive payments for a set number of years – maybe even as little as five years.

Benefit Amount

Another factor determining the cost of a disability rider is the benefit amount you wish to be paid each month. A higher benefit amount will increase the cost of the rider.

Length of Payments

When you add a disability rider to your life insurance policy, you will need to decide how long you want to receive payments after becoming disabled. You can choose a particular number of years, until a certain age, or even until death.

Do I need to add a Disability Income Rider to my policy?

If you can afford it, a Disability Income Rider is an excellent addition to your policy. If something happens and you become disabled, this rider will provide additional financial security for you and your family members.

#6 Return of Premium Rider

If you purchase a return of premium rider, the insurance company will return ALL of the money you paid on your premiums if you outlive the term of your policy. 

On the surface, adding this rider seems like a no-brainer. However, it is very costly to add this rider to your policy. 

A Return of Premium Rider is only added to term life insurance policies.

How much does it cost to add a Return of Premium Rider?

It is very expensive to add a return of premium rider to your policy, increasing your premium by around 30%.

Do I need to add a Return of Premium Rider to my policy?

If you can afford it, then do it. I mean, who wouldn’t want to get all of their money spent on premiums returned to them? 

#7 Term Conversion Rider

Most insurance companies offer a Term Conversion rider. This rider allows a term life policy to be converted to a permanent life policy (or whole life policy) at the end of the policy’s term. 

By adding this rider, you can retain your life insurance coverage without going through additional underwriting. 

And because policyholders are significantly older when their term life insurance policy ends, they may have health issues that would impact premium rates on a new policy. They may even be denied a policy.

A Term Conversion rider will keep your life insurance costs lower if you want to maintain a life insurance policy after your term policy has expired.

How much does it cost to add a Term Conversion Rider?

Most of the time a Term Conversion Rider doesn’t cost anything, but it does depend on the insurance company. 

To add a Term Conversion Rider to your life insurance policy, the insurance company needs to approve you when you initially apply for insurance. 

One other caveat of adding this rider is that your death benefit amount will only be up to the value set on your original policy. You can not increase the death benefit amount when you convert your policy.

Do I need to add a Term Conversion Rider to my policy?

If they offer a Term Conversion Rider, it makes sense to add it to your policy, but only if it can be added with no additional charge. If the company only offers it with a fee, I’d recommend looking at other life insurance companies that don’t charge for this rider.

#8 Waiver of Premium Rider

If you suddenly became disabled and could not work, which of your monthly or annual bills might you be unable to pay? Would you have the money to continue paying on your life insurance policy?

A Waiver of Premium rider waives your premiums if you become disabled and cannot work. Throughout the entire time you are disabled, you do not need to pay your premiums to maintain your policy. 

Then, 0nce your disability ends, you are required to resume your premium payments. 

Qualifying for a waiver of premium rider is usually difficult. Also, the insurance company will outline very specific parameters regarding what will qualify as a disability.

How much does it cost to add a Waiver of Premium Rider?

The cost to add a Waiver of Premium Rider depends on the death benefit amount on your policy. 

For instance, adding this rider to a $100,000 whole life policy will cost anywhere from $2.50 to $10.00 per month. 

It is not that expensive to add this rider, but keep in mind that it is usually difficult to qualify for this rider.

Do I need to add a Waiver of Premium Rider to my policy?

If you can afford to add this rider, I’d recommend it. If you become disabled suddenly, this rider can help you keep your life insurance policy.

You may also want to consider purchasing a Long-Term Disability Insurance policy instead of adding a Waiver of Premium Rider to your policy. 

A Long-Term Disability Insurance policy will provide you with needed income if you suddenly become disabled. This kind of policy will help you cover many of your bills, not just your life insurance premiums.

I have more questions about life insurance. Where can I get my questions answered?

When you start looking at life insurance policies, usually you end up with loads of questions. Life insurance can be a complicated product that many find hard to understand. 

To help our clients better understand this topic, we’ve written several articles in our learning center that address this topic. 

Here are some of those articles that you may find helpful as you consider this important insurance purchase.

• Life Insurance 101 (Understanding Whole, Universal, and Term Life Insurance)
• What’s the Process for Buying Life Insurance?
• How Much Life Insurance Do I Need? And Other Life Insurance Questions
• Is My Group Life Insurance Policy Enough? Will It Protect My Family?

Partnering with Baily Insurance Agency

At Baily Insurance Agency, we are committed to our clients. We demonstrate this by continually producing helpful content in our learning center to help our clients make informed buying decisions.

Baily Insurance Agency also strives to have integrity in everything that we do. We believe that every person needs an insurance agent dedicated to understanding their insurance needs and finding the best product and pricing to meet those needs.

Since 1880, we’ve been protecting our customers. If you are in Pennsylvania, West Virginia, or Ohio and need an insurance team to help protect what matters most to you, our team of insurance experts is waiting to serve you.