Supplementary contracts in life insurance are also known as riders. These are additional benefits attached to the basic policy for a minimum additional cost in your premium. These riders are not offered by the basic policy, and the coverage is upon full payment or up to a specific age.
Types of Riders
Waiver of Premium. This type of rider waives the payment of premium by the insured when the policyholder has a disability that is total and permanent. This is when the policyholder can no longer perform his employment or any productive occupation or business to which he is equipped by education or training. It requires a waiting period of six (6) months before the policyholder can be considered to have a total and permanent disability. This rider ensures that the policy is in effect even if the policyholder is no longer paying the premium due to his critical condition. This rider ends when the insured has reached a certain age, usually 60 to 65 or when the term in the policy ends. There are exclusions for this type of rider, and these are self-inflicted injuries and combat activities.
Health Insurance Rider
This type of rider covers critical illness, accident reimbursement, and a benefit wherein it covers daily hospital income. The insurance company usually covers 15 kinds of illnesses or even up to 35 to 38 kinds of ailments for comprehensive coverage, including cancer, heart attack, or tumor. This rider only covers the insured if he is paying for this coverage. The policyholder can discontinue this rider or add up to his basic plan within the first year of paying the premium. Some illnesses may be excluded from this rider if the insured has the pre-existing condition listed in the critical illness covered by the insurance company or may still be covered but with a higher cost.
Accidental Death Benefit
This type of rider covers the insured’s death due to an accident where the insurance company pays an additional amount to the beneficiary. The cause of the insured’s death must be due to an accident and must be within 90 days from when the accident happened. This type of benefit ceases upon full payment of the policy.
Payor’s Benefit
This type of rider is attached to the juvenile policy. A juvenile policy is a life insurance policy wherein the child (under age 18) is the insured. Upon the death or disability of the payor, the premium will be waived up to the maturity of the policy or when the child has aged 25.
Guaranteed Insurability
This type of rider allows purchasing an additional policy without evidence of insurability. This means that the policyholder will have new coverage without requiring medical exams or answering health questionnaires.
Term Rider
This type of rider dramatically increases the coverage or benefit of the policy, and this may be a 1-year, 5-year, or 10-year plan attached to the permanent life insurance. Payment is only minimal. This rider is a good choice for those policyholders who cannot afford high premiums for higher coverage for their permanent life insurance.
Family Income Rider
This rider is a modified decreasing term insurance that guarantees monthly installments added to the face amount. Aside from the death benefit, the additional amount will be paid up to the beneficiary as a monthly income.
All the above riders or supplementary contracts can be attached to your basic life insurance policy. You can attach them all to your basic policy with additional costs for each rider, or you may choose one or two riders that may best fit your needs.
