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Demystifying life insurance riders



When asked about a variety of life and health insurance products, a recent survey by ReMark found that life insurance is the least understood product in the life and health insurance market. But in that lack of understanding lies an opportunity, a chance for us at Haven Life to help you better understand what life insurance is, why it’s important, and whether it might be right for you and your loved ones.

Here, we break down one of the parts of life insurance that has traditionally been seen as confusing by customers: the policyholder.

What is a rider anyway

You may understand the basic concept of whole life insurance – you buy coverage for a certain amount of time (or term). If you, the policyholder, die during the term of the policy, your beneficiary will receive a lump-sum death benefit equal to the value of the policy. Simple enough.

However, while many improvements have been made to streamline the way life insurance can be purchased, many are still unclear about the various associated rider options. To some, the term “rider”

; leads people to believe there are policy exclusions or caveats. But in many cases, life insurance riders actually work to the benefit of the policyholder.

To clarify things, it is important to remember that a life insurance carrier is generally a function that is Moreover to life insurance. In other words, riders can help applicants get the tailored and personalized coverage they need.

Common, but confusing, riders

Once you understand the concept of a rider, it can be easier to sift through the different rider options to see which, if any, might make sense for you.

While each insurer will have their own rider offers and policies, some of the more common riders you should expect to see include the following:

Accelerated death benefit

This type of rider has several names and may be called a lifetime benefit rider or terminal illness benefit rider. But no matter what it’s called, the overall concept is the same.

An accelerated death benefit is a provision attached to a life insurance policy that allows the policyholder to access a portion of the life insurance’s death benefit while they are still alive. The caveat here is that this typically requires a policyholder to have a documented life expectancy of two years or less—hence the name “terminal illness rider.” In addition, how much of the death benefit a policyholder has access to varies from policy to policy.

How could this rider benefit you? Because equivalent medical or end-of-life care for a terminal illness can be costly, access to a portion of a policyholder’s death benefit can help cover some of these expenses. It can also help a policyholder settle affairs, so as not to financially burden loved ones when they pass – a primary reason people often buy term life insurance in the first place.

Accidental Death Rider

While the death of a policyholder as a result of an accident would generally be covered by the terms of a life insurance policy, an accident rider is an additive option. In addition to the policy’s normal death benefit, through this rider, your beneficiaries would receive an additional lump sum if you die in an accident.

While the benefit of a larger cash payout may be helpful for some – especially where an accident involves an unexpected or early death, not all accidents are covered. It is therefore important that you check with their insurer about the conditions for this driver and specifically ask what type of accidents are covered.

Premium waiver for disability

The name of this rider does a good job of explaining what it means. Essentially, the inclusion of a disability waiver in life insurance means that if a policyholder becomes totally disabled (in accordance with the terms of the policy itself), the insurer will waive subsequent premiums until the policyholder is no longer disabled. . If it is a lifetime disability, premium payments are covered up to a certain age.

The benefit of this rider is that, in the event of a catastrophic disability, it prevents your policy from lapsing. However, it is important that you read the fine print on this type of rider because there is often a six-month waiting period before you can have your premiums waived, is usually only available for an additional fee, and there may be age or state availability restrictions.

Disability Income Insurance Rider

If you were to become disabled and unable to work, those who choose this rider would receive a monthly stipend from their life insurance company to replace a portion of their income. Like the premium rider’s disability waiver, in the event of disability, life insurance coverage premiums may be waived.

Ultimately, some may be better served by purchasing a stand-alone disability insurance product (such as Haven Disability). However, for those who may not have access to a disability policy, this waiver may be a good option.

The Haven Life Plus rider

Eligible Haven Term policyholders can enjoy the Haven Life Plus rider, a set of bonus features intended to benefit the policyholder while you are still alive. This rider includes access to a training app, online trust and testing services, secure online file storage and more – all at no cost or at a discounted price. Read more about Haven Life Plus here.


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