Appendix A: Riders
Riders are options you can add to your base life insurance policy. For an additional premium, you receive additional benefits. Below is a list of common riders.
This rider provides an additional death benefit if you die accidentally. While this plays to many people’s fears of dying in an accident, you need a specific amount of insurance no matter how you die. Avoid paying for this benefit which is unlkely to pay out. If you need more life insurance, buy it. If you don’t, save your money.
Guaranteed Insurability Option (GIO)
This rider gives you the option to purchase more life insurance in the future without a medical exam. There is a cost to this option. It’s typically used for business insurance needs and would not normally be something a consumer would look at.
Children’s Protection Rider (CPR)
This provides a small amount of life insurance to your children, at a very inexpensive premium. It’s a quick, easy, and inexpensive way to put a bit of insurance on your kids. In addition, a typical CPR would also allow them the option to purchase an individual policy when they become adults – very beneficial if they become uninsurable as a juvenile. If you want a small bit of coverage on your kids, this is a reasonable way to do so.
Disability Waiver of Premium (WP)
This rider pays your premium if you suffer a long term disability. Generally the rider kicks in after 6 months of disability. This is almost a good idea – except the correct decision should be to ensure you have a strong long term disability policy that covers your income rather than this rider. Then if you become disabled, your disability policy provides you a replacement income, not just paying your life insurance premiums.
Spousal and Term Riders
These types of riders aren’t so much riders, as they are individual polices that get added on to a base policy with an associated small reduction in premiums. i.e. a spousal rider would be like your spouse having their own policy, just that the coverage is added to your policy and you save $5/month. Term riders are what was described in the section above on Layering (layering is just adding term riders on top of each other).