A term rider is an additional policy added to a permanent life insurance policy that provides temporary coverage for a limited period. The rider can be added to the permanent policy at the time of purchase or later, and it can be removed when it’s no longer needed. A term rider can increase the death benefit of a permanent life insurance policy, providing additional protection for a specific time period.
Benefits of a Term Rider
Adding a term rider to your permanent life insurance policy can be beneficial in several ways:
|Cost-effective||A term rider can be cheaper than purchasing a standalone term policy now and a permanent policy later because life insurance rates increase as you age.|
|Flexible||A term rider can provide flexibility to adjust your death benefit over time as your needs change.|
|Temporary coverage||A term rider can provide temporary coverage for a limited period, such as paying off a mortgage or a child’s student loans.|
Considerations for a Term Rider
It’s important to keep in mind the following considerations when it comes to a term rider:
- A term rider will increase the premium of your permanent life insurance policy.
- A term rider cannot be added to a policy you already own, and not all policies allow you to remove the rider before its term is over.
- If you’re primarily concerned with cost, a standalone term policy may be a better option.
In summary, a term rider in life insurance can provide additional temporary coverage to a permanent policy, allowing for flexibility to adjust your death benefit over time. However, it’s important to weigh the cost and other considerations before adding this rider to your policy.
- Forbes. Understanding The Life Insurance Term Conversion Rider
- Investopedia. Term Life Insurance: What It Is, Different Types, Pros And ...
- Progressive. Rider: Definition, How Riders Work, Types, Cost, And ...
- Bankrate. What Are Riders In A Life Insurance Policy?
- USAA. Types Of Life Insurance Explained