What are life insurance riders?
Life insurance is coverage that can help your loved ones cope financially when you pass away.
An additional benefit, or a “rider” as it is also known, is an optional feature that allows you to build certain provisions into your policy. Think of it like buying a car: Your life insurance policy is the vehicle, and riders are the extras like heated seats or a leather interior.
They’re designed to add flexibility to your coverage and take into account the fact that life insurance policies often last for years – and a lot of life changes can happen during that time.
How do life insurance riders work?
Riders are added to a life insurance policy. This is usually done at the time you purchase the policy, although in some cases you can add them later.
Your options will vary depending on the kind of life insurance policy you have, and your coverage provider.
You should carefully review the terms and conditions for each rider to make sure you know what is – and isn’t – covered.
Some riders also have special tax treatment, so make sure you work with a professional to understand what this means for your specific situation.
Riders can be available on term and permanent life insurance policies.
Is it worth getting a life insurance rider?
Life insurance riders allow you to tailor coverage to your specific needs and can be great enhancements to the coverage you’re already getting.
Because of this added value, riders will likely increase your monthly premium. On the flip side, this may still be cheaper than purchasing a separate policy just for the coverage a rider might provide.
You can add multiple riders to one policy. You can also remove riders, but there may be some conditions.
This adaptability is a key advantage of life insurance riders, allowing you the ability to adapt your coverage through major life events like marriage, divorce, having a family and retirement.
For example, some riders allow you to “waive” premiums, meaning the policy won’t lapse if you’re unable to pay due to injury or illness.
What are some common types of insurance riders available in Canada?
Here are a few of the insurance riders you might come across in Canada:
Child Term Rider
This can provide life insurance coverage for your children as well, meaning you would receive a payment in the tragic event they died.
Disability Income Rider
This is usually a lump sum payment you could receive if you are disabled.
Critical Illness Rider
This is a lump sum payment you can get if you’re diagnosed with an eligible critical illness.
Return of Premium Rider
If you’ve got a term life insurance policy, this rider can refund you some of your premiums if you survive the term period without making a claim.
Waiver of Premium Rider
If you’re totally disabled, this rider will “waive” future premiums – meaning you don’t have to pay them – but your life insurance coverage won’t lapse.
Paid Up Additions Rider
You can add paid-for insurance to your policy, meaning you’ll increase the payment your loved ones receive. This may only be offered on a participating life insurance policy.
Term insurance rider
If you’ve got a participating or universal life insurance policy, this rider allows you to add a term insurance policy, usually for increase coverage over a shorter term.
Accelerated death benefit rider
If you’re diagnosed with a terminal illness, this rider could allow you to use some of the value of your life insurance policy before you die.
Guaranteed Insurability Rider
This rider allows you to buy more coverage at certain times without extra underwriting, meaning your age or health status wouldn’t be a factor.
How can you add or remove a rider from your life insurance policy?
If you’re buying a new policy, you can add riders at the same time.
If you already have a life insurance policy and you want to add or remove a rider, reach out to your life insurance provider.
FYI: Adding a rider may require more underwriting – which can involve medical questions – and may increase your premiums.
Should everyone add riders to their life insurance?
This will depend on your specific situation. In general, they can be a great “value add,” providing more comprehensive coverage to help protect you and your loved ones through life’s ups and downs.
This is just a brief introduction to some of the riders that can be available to Canadians. For advice that’s right for you, make sure you speak with an insurance professional.