Life insurance riders: Essential protection for new and soon-to-be parents
Starting or growing a family is a dream for so many people. As you excitedly prepare for the arrival of your little ones, securing your family’s financial future is on that checklist between the medical appointments and baby-proofing your home.
Obtaining life insurance is integral for your children’s financial security, current and future alike. But how do you find the best coverage for your family’s needs? The dollar amount of coverage is an important consideration, but riders are an excellent way to enhance your life insurance policy. Riders enable you to customize your policy for specific events and circumstances to best protect your family from unforeseen events. Here’s what new and prospective parents should know about life insurance riders, and how to bolster your policy with them.
What are life insurance riders?
Riders are add-ons to a life insurance policy that provide extra benefits in addition to the baseline coverage. They are designed to tailor the coverage to your family’s specific needs and concerns.
Many parents opt for a children’s level term rider to provide additional protection for their young children until they become self-sufficient adults. Some parents also desire riders that let them purchase additional coverage after certain ages or life events to provide additional financial assistance to their adult children.
If you have a large family or significant age gaps between spouses or children, riders provide a great deal of flexibility and value to best ensure your children’s financial futures.
Key life insurance riders for new and soon-to-be parents
There are several different riders you can select to customize your life insurance policy. According to Forbes, 66% of parents1 are concerned about their family’s ability to pay bills if they die. Having a life insurance policy in place can allay this fear, but riders provide additional layers of surety for new parents.
The following riders may be popular among new parents:
Children’s Level Term Rider
The children’s level term rider provides additional life insurance coverage for all of your eligible children under a single rider. Eligible children are unmarried, financially dependent on you, between the ages of 15 days and 23 years old, and can be biological or legally adopted.
Waiver of Premium Rider
The waiver of premium rider waives your life insurance premiums if you become disabled and unable to keep working.
This rider gives you the security of knowing your life insurance will remain active and able to pay your beneficiaries in case you become unable to work.
Accelerated Death Benefit Rider2
If you are diagnosed with a terminal illness, the emotional strain can be vast for your family. The ability to access death benefits early relieves the financial worry that comes with medical bills, living costs, and funeral expenses. Your beneficiaries will still have death benefits after your passing, and you have the peace of mind knowing your final expenses will be covered.
Guaranteed Purchase Option Rider
The guaranteed insurability rider is an excellent option for new parents. It enables you to purchase additional coverage for your existing policy after specific ages or life events so you can expand your coverage over time without needing to take out additional insurance.
If your family grows and there is now a significant age gap with your children, the guaranteed purchase option rider provides protection if one or more children ages out of the child rider, but you still want to protect your older children.
Accidental Death Rider3
This rider pays an additional benefit on top of the death benefits outlined in your policy in the event your death was an accident and occurs within 180 days of the accident.
Why new and soon-to-be parents should consider adding riders
Why add a rider to your life insurance policy if you just had a baby, or are expecting soon? Enhancing your coverage provides so many additional benefits and safeguards:
Safeguarding your family’s future
Riders provide highly specific, comprehensive coverage that goes beyond the death benefit payout alone. When buying life insurance while pregnant, your insurance needs may change between this time and when the baby is born. Divorce, death of a spouse, and career changes drastically affect household income and expenses.
Riders are designed to adapt to your family’s needs as they evolve.
Affordable and flexible coverage
Factors like your income, age, and desired coverage level affect how much you will spend on life insurance. Taking out multiple life insurance policies can be time-consuming and costly whereas riders fill in coverage gaps for specific events and circumstances while offering the flexibility to opt out of them.
How to choose the right life insurance riders for your family
How do you choose the right life insurance riders to best enhance your policy? SBLI’s knowledgeable agents can help you determine which is the best life insurance for new parents and soon-to-be parents in your age bracket and financial situation. Before you consult with an agent, you might consider the following factors:
Assessing your needs
Consider your family’s present and future. How healthy are you and your spouse? Where do you live, or plan to live? What is your income currently like, and what do you reasonably expect it to look like in the near future? After the baby arrives, are you part of the “one and done” club or would you like to grow your family in the future? All of these factors play a role in the type of life insurance riders that would be the best fit.
Budget considerations
Your household budget determines how much wiggle room there is for life insurance premiums opposed to more pressing daily needs like housing, food, and medical insurance. A basic life insurance policy provides baseline financial protection for your family. If you can afford additional riders on your plan, consider the cost versus benefit and how life insurance factors into your family’s overall financial goals.
Flexibility for the future
One of the key advantages of riders is their flexibility. Future-proofing riders offer the option to convert term life insurance to whole life insurance, offering the cost savings of term policies and the ability to change your mind if your circumstances change.
Common misconceptions about life insurance riders
Riders are unnecessary add-ons
According to the Insurance Information Institute, parents of minor children are more likely to have life insurance compared to the rest of the general population (59% to 52%, respectively). However, 47% of parents4 feel that they don’t have enough coverage to protect their families in case of catastrophe compared to 41% of the general population.
Many new or prospective parents are led to believe that riders don’t provide much value. Riders provide great value and flexibility without the expense and hassle of buying additional insurance, customizing your policy to your family’s needs. They can also close worrisome coverage gaps, affording parents greater peace of mind that their families can still take care of household bills after they are gone.
All riders are the same
It’s commonly thought that riders available for life insurance for parents are one in the same. When purchasing life insurance, new parents tend to have highly specific concerns that can make it overwhelmingly to pick confusingly similar riders:
- “What if I’m in an accident?”
- “What if I cannot work while my children are still minors?”
- “What if my children will still depend on me well into adulthood?”
Riders are vastly different in terms of coverage, benefits, and language. It’s crucial to carefully research each one before deciding to add it to your policy, to get the most value out of your coverage and ease the worries that parents most often have.
Riders are too expensive
As new parents and growing families are bombarded with expenses, it’s often thought that riders are too expensive to bother with. This is a powerful perception that can cause parents to forego cost-effective ways to add a great deal of value to their life insurance policies. Riders can be a very cost-effective way to enhance coverage without having to buy additional plans.
You can’t add riders after the initial policy purchase
It’s a common misconception that you can only buy riders when you first get your life insurance policy. While these rules vary by insurer and you need to check first, many do offer the option to add riders later.
Life insurance for new parents can take many forms, and it can be mentally taxing to choose riders when your policy begins. But as your family grows or your family’s needs change, riders may be added years after your policy originated. If your children have special needs and you expect to need more coverage, you can add a rider at a later date. Need to adjust your death benefit because one child aged out of the child rider, but you still have minor children you hadn’t initially planned for when you took out your original policy? Riders provide the flexibility to amend your coverage in the future without starting the process all over again.
Riders complicate the policy
Insurance is often confusing and overwhelming: each state has their own insurance laws and insurers have their own rules. Throw in riders, and it gets even more complicated, right?
Riders do the opposite and can simplify your coverage. When you bundle multiple types of additional protection into one insurance policy, it’s much easier to manage than several different standalone policies.
Riders are a highly cost-effective way to customize your life insurance policy to your family’s needs. New and soon-to-be parents can get comprehensive coverage and peace of mind by adding riders to their term or whole life insurance policy, fully safeguarding your loved ones’ financial futures.
No matter your needs, SBLI makes life insurance simple. Get a quick quote for term life, apply online for Simple coverage, or speak with an agent about whole life and which riders might be right for you. Find the right protection for you and your loved ones—on your terms.
Explore your life insurance options
Not all riders are available for all products. An Accelerated Death Benefit rider is automatically included and subject to an administrative expense charge upon acceleration. Other riders are available at an additional cost. Rider form series BC-40.1, 18-R-AXRDB, 18-R-AXDDB, BN-9, BN-50, BN-56, and 14-WOPR.
1Source: “Life Insurance Statistics” by Forbes Advisor, Forbes.
2Subject to an administrative expense charge upon acceleration.
3All Accidental Death benefits payable are subject to exclusions and limitations and may vary by state. Please refer to your policy for terms and conditions.
4Source: “Facts and Statistics: Life Insurance” by the Insurance Information Institute, III.
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