Since the needs of applicants are different, life insurance policy contains riders which are inserted during underwriting as per the applicant request. The agent or the underwriter ought to identify the necessary riders to be included in the policy to serve the applicants’ needs.
To safeguard against the possibility of disability, a policy owner can elect to insert waiver on premium rider. The raider waves the payments of premiums during the period of the disability of the policy holder. The provision for waiving of premiums is usually after specified period of disability, which is usually six months. The company continues to waive the premiums due for the duration of disability, without affecting the benefits payment incase the insured dies during disability period. If the policy has a cash value, the policy owner has access to the cash in form of loan from the policy as if the premiums were still being paid out of pocket.
The waiver on premium rider can be polished to allow the life policy to pay for disability income usually valued at $ 1000 of face amount of life policy. The insertion of waiver of premium with disability income results in waiving of premiums in event of disability usually lasting for over six months and the inception of disability income payment from the company after the six months in disability. A variation of the policy is the disability income rider which pays for disability of income, without waiving the premiums payments.
The accidental death benefit rider supplements the coverage for individuals who works in high risk environment and cannot afford to purchase enough insurance as needed. The rider provides, in case of death resulting from an accident, the benefits to be paid will increase in multiples of the original amount. The rider is offered for specified period of time and is usually unavailable for older people because of the high accidents rate.
To safeguard against inflation, the life policy provides an option to erect cost of living adjustment raider. The rider increases the face value of the policy at specified intervals by a percentage tied to consumers’ index or at stated amount in the contract.
The guaranteed purchase option rider allow the insured the option to obtaining additional coverage at specified age, period or date without proving the insurability. The rider facilities the insured ability to increase the policy value as the cost of living goes up or as the obligation as the bread winner increases. A bread winner obligation to the family will increase as more family members are added. The option is excised when the insured request for the coverage which is issued at standard rate depending on the attained age.
Because of unpredictable illness and unforeseeable financial disability, an insertion of living need or accelerated death benefits rider will provide the insured with ability to receive percentage of proceeded from policy due to terminal illness before death to cover for medical expenses. The disadvantage with the erection is the reduction of benefits paid after the death of the insured which might not be enough to support the beneficiaries.
Raiders are important part of life insurance policy and ought to be factored through the planning processes of policy purchase. The selection of raider should be aligned to the current situation of the insured and the main objective of purchasing the policy. People purchase life insurance policy for different objectives.