Riders for Extra Benefits and People

Understanding Policy Riders and Benefit-Increasing Options

A policy rider is an amendment attached to a base life insurance policy that modifies benefits or coverage terms. Adding riders allows you to tailor a life policy to match specific client needs. Riders typically increase the total premium charged for a life insurance policy, as each added feature represents an additional commitment by the insurance company.

One common benefit-increasing option is the guaranteed insurability rider. This rider permits the policyowner to purchase specified amounts of additional life insurance without providing evidence of insurability. Option dates typically occur at regular intervals, such as every three years, up to a maximum specified age. Qualifying life events can also trigger option dates, commonly including marriage and the birth or adoption of a child. Additional coverage purchased under this rider is issued at the insured's attained age rate. If the insured does not exercise a guaranteed insurability option during the open window period, that specific option expires.

Another way to adjust coverage over time is through a cost-of-living rider. This rider provides for increases in the death benefit to reflect inflation, subject to the rider's terms and limits. These adjustments are typically tied to increases in the Consumer Price Index. When the death benefit increases under a cost-of-living rider, it generally increases the premium or other cost of insurance for the additional coverage. However, these increases do not require the insured to provide evidence of insurability. How a decrease in the Consumer Price Index is handled depends on the contract terms, but the base policy's original face amount is generally not reduced.