A term conversion rider allows you to convert your term life insurance policy into a permanent life insurance policy without having to go through underwriting again. Because term conversion riders are so common and are usually automatically included for no charge the term policies that include these riders are just referred to as convertible term life insurance.
Having convertible term life insurance is especially beneficial if you run into severe health issues as you age. For example, if you purchased a 30-year term policy and you’re diagnosed with cancer in the 10th year of your policy you can choose to convert it to a permanent policy and you wouldn’t be declined even though you now have cancer.
If you purchase a waiver of premium rider with your life insurance policy, the insurance company won’t require you to pay your policy’s premiums if you were to become disabled.
This rider comes with conditions. For example, most insurance companies won’t start waving premiums until the disability has lasted six months. And oftentimes the rider states that the disability has to occur before you turn 65. But during this period of total disability, your life insurance coverage remains inforce even as you’re not paying your premiums. And even if you recover from your disability, you don’t have to pay the premiums back.
An accelerated death benefit rider is normally automatically included on term life insurance policies free of charge. If you are diagnosed with a terminal illness, this rider allows you to have access to a portion of your policy’s death benefit to spend any way you wish.
For example, let’s say you have a 30-year $500,000 term policy and you’re diagnosed with the rare illness in year 10. Your doctors tell you that you have less than a year to live but there are experimental treatments available that will prolong your life, however, your health insurance doesn’t cover these costs. You can accelerate some of your policy’s $500,000 death benefit to pay for the treatment.
If you’re a Quotacy customer, you’d just tell your agent the situation and he or she will help you with the paperwork that the insurance company needs. After approval the insurance company sends you a check for the amount. The amount you claim will reduce the death benefit you leave behind to your beneficiaries in that amount.
How much of your death benefit you can accelerate varies among life insurance companies. Some let you make a claim for the full amount and some only allow you to claim a certain percentage.
A child rider can be purchased to provide life insurance coverage on all of your children under the age of 18. The cost of this rider is very minimal, usually around $50 a year for $10,000 in coverage. And this is $10,000 per child, not total. So whether you have just one child or ten children, the $50 provides $10,000 of insurance on each one.
The worst thing in the world would be for your child to die before you, but if this happens, this rider can provide funds for the funeral and memorial services. Your children are likely to outlive you and once they are adults, you or your child have the option to convert this rider into a permanent policy for the child without having to go through underwriting.
If you purchase an accidental death benefit rider with your policy, the insurance company will actually increase the death benefit that they pay to your beneficiaries if you die as a result of an accident.
For example, if a policyowner has a $500,000 term life insurance policy with a $250,000 accidental death benefit rider and this person dies due to a heart attack, the beneficiaries receive $500,000.
But if the person dies in a plane crash the beneficiaries receive $750,000. This rider is popular with those who have a dangerous occupation or participate in risky hobbies.
And not all life insurance companies offer the same riders. When you apply for life insurance through Quotacy, before you even choose to apply, you can see what riders are offered by our insurance companies.
When running a quote, you’ll end up on this page where you choose which insurance company you’d like to apply to. Click the Ratings and Info tab under any company logo and an information box will drop down.
On the right hand side you’ll see what riders are available through each of the different insurance companies.
After you apply let your Quotacy agent know if you’re interested in adding any riders. He or she will let you know the exact cost and can add it to your policy during the buying process.
Thanks for watching! If you have any questions about life insurance make sure to leave us a comment. If you have any questions regarding today’s topic, you can learn more in this blog: Types of Life Insurance Riders. Otherwise, tune in next week when we talk about what not to do when you name your policy’s beneficiaries. Bye!