What is a life insurance rider?
A rider is a word commonly found in insurance contracts. A contract of insurance is an investment made by a person with the end view of protecting him from possible future losses. It is really a contract allowing a company to manage a person’s finances so that he can look forward to getting the capital money he invested as well as the interest later on which we have covered already in depth.

To understand the concept of an insurance rider, it is important that we get our basic understanding of insurance policy or contract correct. Take note that an insurance rider is a part of a insurance policy and without the main policy, a rider cannot exist by itself. A clearer picture will be presented once we get our basic concept correct.

Every person who gets an insurance contract expects to get something in return a few years from then time he entered into the contract. However, most insurance contracts end up as court cases because of the failure of some insurance companies to fulfill the terms of the contract. Those who have had sad experiences with insurance claims said that insurance companies will woo you and will promise you the sun and moon until you give them your hard earned money and then when the need arises, they just ignore you.

In an insurance contract, the insured party may be an individual or a company, the insurance company is known as the insurer and the insurance contract between them is known as the policy.

An insurance contract may be in the form of a life insurance, fire insurance, Political risk insurance and other kinds of insurance.

Since an insurance policy is a contract, it must adhere to the requisites of a contract meaning there must be a meeting of the minds between the insurer and the insured as to the fulfillment of the obligation or consideration of the contract.

A rider, which is usually attached in a life insurance, refers to the extra coverage or protection offered by the insurance contract, aside from the primary coverage indicated in the policy. However, since the rider is not originally covered in the policy, the insured has to give an additional payment for such rider.

A life insurance rider can be in the form of a disability income or accidental or accelerated death benefit for the insured, or it can come in the form of a waiver of premium or guaranteed insurability clause.

An accelerated death benefit means that when an insured has a terminal illness, he is allowed to collect a part or all of his death benefits while he is still alive. An accidental benefit rider means that an additional sum may be paid to the beneficiaries of the policy if the insured dies in an accident. To be more technical about it, the additional amount can only be obtained if the death comes as a result of the accident and not of anything else.

On the other hand, a disability income rider provision means that the insured is given an income in case he becomes disabled. The income or allowance would be given for as long as the disability exists,

A guaranteed insurability rider is a provision which allows the person insured to get another insurance policy at a certain period and he would not be required to present or prove his insurability. This means that even if the insured becomes uninsurable during that period, he could still be issued the policy because of the rider.

The waiver of premium is the kind of rider commonly found in life insurance policies. An insurance contract is so strict it requires continued payment of premium no matter if the insured no longer has the financial capability to continue paying. Failure to continue with the payment will cause the insurance to lapse. With a waiver of premium rider, the policy holder is assured that the insurance contract will continue even if he becomes disabled and can no longer pay the policy.

Most people get insurance policies without taking the time to read the fine lines very well. And when the inevitable happens, they complain that they have been duped into getting the insurance contract. To avoid this, you should always ask the agent to explain provisions which you do not understand.

Some people who are not aware of what an insurance rider is, hesitate to get the rider as it has an additional price. However, if you are aware of the benefits that some of these riders can offer you, then perhaps, you will waste no time in agreeing to the rider.

Your insurance advisor should keep you inform about riders as well as explain the benefits of riders to you. Insurance riders often give you additional coverage at only a fraction of a new policy because you already have a main policy in existence. Make sure you get to know riders well and see if you should include that before you sign off on your policy.