What is a life insurance rider? A life insurance rider is an add-on to your life insurance policy that customizes the policy’s coverage when certain items and conditions are not included in the policy itself. Riders provide flexibility and personalization based on your needs and concerns in order to maximize your policy’s value as you protect your loved ones.
Here’s how life insurance riders work and how you can best enhance your coverage value with SBLI life insurance policies.
Don’t know how much coverage you need? Check out our guide on how to find the right coverage level, and how riders can help you get the most value out of your plan.
Understanding insurance riders
What is a life insurance rider and why would you add one?
A life insurance rider is an add-on that can provide several different types of additional protection in addition to your basic life insurance policy. Riders are more common with whole life insurance than term life insurance, but there are riders that can be added to term life insurance policies.
While riders will increase your life insurance premium, the cost is relatively low since there isn’t much underwriting required.
The role of riders in life insurance
Riders can be added at your discretion so you can get the most value of your life insurance policy without paying extra for add-ons you don’t need. When you meet the conditions of your life insurance rider during the coverage period, you can file a claim and reap the benefits of that rider, rather than the traditional outcome of life insurance where only your beneficiaries receive a payout upon your death.
Benefits of adding insurance riders
Customization
Life insurance riders enable you to choose only the additional benefits that you find the most valuable or stay within a budget. For example, child riders are available to parents and guardians but people with no children or adult children don’t have to pay extra for this rider.
Additional protection
Life insurance riders provide surety for unexpected events, such as accidents, acquired disabilities, and severe illnesses. Riders provide additional peace of mind and financial security for you and your loved ones.
Cost efficiency
By enhancing your life insurance policy with riders, you can have cost-effective coverage without taking out multiple policies, such adding a long-term care rider to your plan in lieu of buying long-term care insurance.
Types of riders available for SBLI life insurance policies
Accelerated Death Benefit Rider (No premium charge)
- Overview: The accelerated death benefit rider¹ is automatically included in all SBLI life insurance policies at no additional cost. This rider pays up to 50% of the death benefit if you are diagnosed with a terminal illness and your death is expected within 12 months.
- Benefit: Early access to death benefits to provide financial relief for final medical, housing, hospice, and funeral expenses to avoid strain on your loved ones and any bequests for them.
- Eligibility: Available with all SBLI life insurance products.
Children’s Level Term Rider
- Overview: The children’s rider offer coverage for all of the policyholder’s eligible children under a single rider. Offers coverage for all eligible children (natural or legally adopted, unmarried, and financially dependent) under one low-cost rider. Provides coverage from 15 days to 23 years old.
- Eligible children: Eligible children may be biological or legally adopted. They must be unmarried, financially dependent on the policyholder, and between the ages of 15 days to 23 years old.
- Benefit: Term life insurance coverage can be converted to a whole SBLI life insurance policy for up to five times the face amount.
- Eligibility: Available with SBLI whole life insurance and SBLI term life insurance policies.
Guaranteed Purchase Option Rider
- Overview: This guaranteed insurability rider lets you purchase additional coverage after specific ages or life events to expand your coverage over time without needing a new medical exam, health inquiries, or separate new policy.
- Benefit: Enables policyholders to add more coverage as needed as their circumstances change.
- Eligibility: Available with SBLI whole life insurance policies.
Single-Pay Paid-Up Additions Rider
- Overview: This rider increases the death benefit payout and cash value with a single additional payment when the policy is issued.
- Benefit: Increases the value of your life insurance as an asset upfront then provides a higher payout to beneficiaries.
- Eligibility: Available with SBLI whole life insurance and SBLI term life insurance policies.
Waiver of Premium Rider
- Overview: This rider waives your responsibility to pay your life insurance premiums if you become totally and permanently disabled.
- Benefit: Protects against the financial burden of paying premiums while disabled.
- Eligibility: Available with SBLI whole life insurance and SBLI term life insurance policies.
Accidental Death Benefit Rider
- Overview: The accidental death benefit rider² pays an additional amount if you die within 180 days of an accident.
- Benefit: Provides extra financial security in the event of an accident.
- Eligibility: Available with all SBLI life insurance products.
Guaranteed Level Premium Term Rider
- Overview: Enhances SBLI whole life insurance policies with affordable term life insurance coverage for up to 30 years, including conversion privileges.
- Benefit: Offers extra term coverage while maintaining whole life insurance that builds cash value.
- Eligibility: Available with SBLI whole life insurance policies.
Considerations when choosing riders
Your personal and family needs
Consider your overall risks for your location, lifestyle, family medical history, and your dependents’ needs, as well as your chief purpose of buying life insurance.
If your family medical history has high likelihood of certain diseases and disabilities, you may want to add waiver of premium rider to your policy. If your priority in buying life insurance is to build a financial legacy for your children, a single-pay paid-up additions rider is one you may want to sign up for.
Cost vs. benefit analysis
When calculating your premium costs, consider your base cost of your life insurance premiums then add the riders. You will need to make a value judgment as to whether the additional cost is worth the benefits provided based on the likelihood of using them. For instance, parents of children under the age of 23 are more apt to see immediate value in child riders while a guaranteed purchase option rider may have less appeal if you don’t anticipate your coverage needs changing.
Policy compatibility
Before committing to your life insurance policy and life insurance riders, review your SBLI documents and any other insurance policies you already have. Read the policy terms of the riders to ensure that they align with your concerns and overall financial strategy in both the short and long term.
Building the most value in your life insurance policy with flexibility and affordability
Need help finding the best life insurance type to ensure your loved ones financial security? Consult with SBLI’s expert insurance advisors today to explore your policy options, get the most value of life insurance riders, and secure a tailored life insurance plan that best fits your needs.
¹Subject to an administrative expense charge upon acceleration.
²All Accidental Death benefits payable are subject to exclusions and limitations and may vary by state. Please refer to your policy for terms and conditions.
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.
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