What Is A Term Rider?
A term rider is an optional add-on to a permanent life insurance policy that provides additional coverage for a limited period. Generally, a term rider is added to a permanent life insurance policy when the policyholder’s needs will decrease over time, but they want to maintain some life insurance until they die.
| Benefits | Drawbacks |
|---|---|
| Provides additional coverage for a limited period | Adding a term rider will increase your premium |
| Can be cheaper than buying a standalone term life policy now and a whole life policy later | Permanent life insurance policies are significantly more expensive than term life insurance policies |
| Allows policyholders to build cash value for a longer time since term policies don’t have that feature | Most companies and policies do not allow you to add a term rider to a policy you already own |
If cost is your primary concern, you might consider a term life policy to cover your beneficiaries’ immediate needs. Note that typically, you won’t be able to add a term rider to a policy you already own. Most companies and policies do allow you to remove a term rider from your permanent life insurance policy before the rider’s term is over.
To summarize, a term rider is an excellent way to provide additional coverage for a limited period if your needs will decrease over time. However, adding a term rider will increase your premium, and most companies and policies do not allow you to add a term rider to a policy you already own.
