Probably the most popular form of life insurance today, Term Life Insurance is heavily advertised by all the major players because of affordable rates. This is the perfect product for young, growing families who may be creating a lot of debt. Since the policyholder is paying only for the cost of insurance for a set period of time, Term Life is the most affordable way to make certain the funds will be available to accommodate a mortgage balance, household debt, college tuition, monthly expenses and final expenses.
Most of the major Term Insurance providers also offer various riders that can be added to the policy which should not be overlooked:
Accelerated Death Benefit
Typically referred to as a living benefit, this rider is very common on most every type of life insurance policy. In most cases, the company does not charge for it, and most agents will add the benefit to the policy automatically. The benefit is commonly triggered by the diagnosis of a terminal disease or major organ transplant. When the trigger requirements are met, the insurance company will make a lump-sum partial payment of the death benefit of up to about 75 or 80%.
Return of Premium
The Return of Premium Rider can make a lot of sense for adults in their middle twenties to late thirties. This rider has become available in the last decade for Term Insurance policies. The rider does exactly what it says when the insured outlives their policy. For example, if a 30 year term policy is purchased to cover the amount of a mortgaged home (or for any other reason), and the insured lives to the expiration date of the policy, all paid premiums are returned to the insured.
Child Term Rider
Purchasing this rider is a very economical way to insure your children. Usually purchased in units (i.e. 1 unit = $2500), this coverage protects all the children in the family for the amount purchased without regard to insurability. Typically, newborns are added at age 1 year. So then, if you are the parent of 4 children, you can insure all of them for one economical rate. In most cases, however, once a claim is paid, the rider is exhausted and comes off the policy.
Insurance riders can definitely enhance the insurance policy and help accommodate the needs of the insured. With so many available today, it is incumbent upon the agent to offer a thorough explanation when riders are recommended and review them in depth at delivery of the policy.
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