Rider (Insurance)
A rider is an optional add-on to an insurance policy that provides additional benefits or modifies coverage for an extra premium, allowing policyholders to customize their protection beyond the base policy.
Exam Tip
Rider = optional add-on for extra premium. Common riders: Waiver of Premium, ADB, Guaranteed Insurability.
What is an Insurance Rider?
A rider is an amendment to an insurance policy that adds, modifies, or excludes coverage. Riders allow policyholders to customize their policies to meet specific needs, usually for an additional premium. They're commonly used in life, health, and disability insurance.
Common Life Insurance Riders
| Rider | Benefit |
|---|---|
| Waiver of Premium | Waives premiums if disabled |
| Accelerated Death Benefit | Early access to death benefit if terminally ill |
| Accidental Death Benefit | Extra payout for accidental death |
| Guaranteed Insurability | Buy more coverage without medical exam |
| Term Rider | Add term coverage to permanent policy |
| Child Term Rider | Cover children under parent's policy |
| Long-Term Care Rider | Access death benefit for LTC expenses |
Common Health Insurance Riders
| Rider | Benefit |
|---|---|
| Maternity Rider | Adds pregnancy coverage |
| Dental Rider | Adds dental coverage |
| Vision Rider | Adds vision coverage |
| Critical Illness Rider | Lump sum for specific illnesses |
Common Disability Insurance Riders
| Rider | Benefit |
|---|---|
| Cost of Living Adjustment | Benefits increase with inflation |
| Own Occupation | Disabled if can't do your specific job |
| Residual Disability | Partial benefits for partial disability |
| Future Purchase Option | Buy more coverage later |
Rider Costs
- Riders typically cost 1-5% of base premium
- Cost depends on rider type and insured's age/health
- Some riders are included free (built-in)
- Others require additional premium
Rider vs. Endorsement
| Feature | Rider | Endorsement |
|---|---|---|
| Industry | Life/Health insurance | Property/Casualty |
| Function | Same (modifies policy) | Same (modifies policy) |
| Other names | Addendum, amendment | Rider (sometimes) |
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Related Terms
Waiver of Premium Rider
InsuranceA waiver of premium rider is a life insurance provision that waives all premium payments if the policyholder becomes totally disabled, keeping the policy in force without any out-of-pocket cost during the disability.
Accelerated Death Benefit
InsuranceAn accelerated death benefit is a life insurance policy provision that allows terminally ill policyholders to receive a portion of their death benefit while still living, typically when diagnosed with a terminal illness with 12-24 months to live.
Guaranteed Insurability Rider
InsuranceA guaranteed insurability rider allows the policyholder to purchase additional life insurance at specified future dates or events without providing evidence of insurability (no medical exam required), regardless of changes in health.
Disability Insurance
InsuranceDisability insurance provides income replacement when a policyholder cannot work due to illness or injury, typically paying 60-70% of pre-disability income after an elimination period.