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| Please click one of the following questions to see the answer or ask a question here. |
Questions:
• Who might an Accidental Death Benefit Rider(ADB) help?
• Tell me about different Life Policy Riders?
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Who might an Accidental Death Benefit Rider(ADB) help?
A:
•If you are young (where accidents are a major cause of death), especially if you're married with a family and you have little savings so that additional sums of money would be needed if death occurs without warning.
• If you have a small amount of permanent coverage and want to have more protection at a small additional cost, even if it is limited to death by accident.
• If you are healthy, but more concerned by the risk of an accidental death as opposed to an illness.
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Tell me about different Life Policy Riders?
A: Riders
There are a number special provisions or extras known as "riders" that, for a price, can be added to your policy.
Disability Waiver of Premium
This rider provides that if the policy owner becomes disabled, under the definition of the contract, the insurance company will "waive" the premium, and the policy will continue as if the premiums were continuing to be paid. The disability waiver of premium is the most common rider included. The rider is generally allowed up to age 65, but then stops because that is when most people are assumed to retire.
To qualify for the rider, most companies require disability to last six consecutive months before the premium is waived. Often, once qualification has been determined, premiums that were paid subsequent to the date of disability will be refunded. A qualifying disability is usually one that prevents the insured from working. This falls into the fairly restrictive, "any occupation" definition of disability. In other words, the insured must be unable to work in any occupation in order to qualify. Many policies also offer a "presumptive disability" which allows one to qualify without being totally disabled. These definitions are similar to most disability income insurance policies.
Accidental Death Benefit
Accidental Death riders, (ADB) also referred to as "double indemnity", provides double the amount of coverage should the insured die in an accident. Previously, the benefit always doubled the original death benefit, but now thanks to huge multimillion-dollar policies, the provision has a volume limitation depending on the company.
At Gold Mountain Insurance, we rarely recommend this rider to our clients because it offers a false sense of security and is usually not cost-effective. Relatively few people actually die as a result of accidents. Those who do seldom leave their families in a financial condition that is worse than if they had died of a stroke, heart attack, or fatal disease. Also, in some cases, it costs almost as much as regular term life premiums.
Accidental Death only pays if an accident is the immediate cause of death. Generally, an ADB payment is made only if the insured dies as the direct "result of bodily injury affected solely through external, violent, and accidental means, independently and exclusively of all other causes," and death must occur within 90 days of the accident.
If your group life insurance offers accidental insurance at work, that's great, but because of the exceptional stipulations, odds are it should not be considered an asset when determining your overall financial security.
Guaranteed Insurability
Also known as the "purchase option", the guaranteed insurability rider allows you to purchase more life insurance at specified times and specified amounts regardless of your health status, occupation and avocations. A great advantage is that it lets you purchase the policy at the same risk classification you originally qualified for when you first purchase the policy. For example, if you qualified for a top rate and in 10 years later you want a new policy and had the guaranteed insurability rider, you could purchase the new insurance at the super preferred rate, even if you are now in poor health.
The typical purchase option permits the insured to obtain policies every three years, normally ending at age 40. The option can also be changed for life changing events such as getting married or when a child is born.
Child Rider
Most policies have a child rider option, which allows you to attach coverage on your children's lives, usually up to age 25. You generally purchase one child rider that covers all of your children's lives. So if you had 6 children or 1, it would cost you the same, which ranges from $5.00 to $8.00 per one thousand of insurance face value.
One advantage to child riders is their convertibility. Normally a child can convert the rider into a permanent policy when he or she becomes an adult. This conversion amount is five to ten times larger than the amount of the rider. Often this conversion can include a guaranteed insurability rider as well, which is an excellent solution for purchasing insurance on uninsurable children. Another noteworthy feature, if the rider is in place prior to the birth of a child, must be the second or more, as soon as the child is 15 days old, he or she is insured, regardless of birth defects.
If there is a RIDER de jour, the Child Rider is Gold Mountain's favorite.
Accelerated Death Benefit
Sometimes considered a form of long-term care insurance, the accelerated death benefit is one of the less known perks of your life insurance contract. Generally this provision is automatically included in most insurance policies purchased within the last 5 years at no additional cost. It allows you to receive a portion of the death benefit in advance, normally 2% of the policy's face amount per month, should you become terminally ill.
Depending upon your specific policy, different carriers use several requirements to determine who qualifies for the accelerated death benefit. Generally, it's a combination of the following:
•Must be diagnosed with a terminal or chronic illness, of which death is likely to occur in a specified period of time.
•Must not be able to perform 2 of the 6 "daily functions" which are: eating, toileting, transferring, dressing, bathing and continence.
•Be permanently confined to a nursing home facility
•Occurrence of specified medical illness that would drastically limit life span without extraordinary medical treatment.
While each company has its own criteria, most companies require that your life expectancy be 12 months or less from the time you file for the accelerated benefit.
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