What is a Rider on an Insurance Policy?

A rider is a provision to an insurance policy that alters the benefits or conditions of the policy. Riders can be used on a variety of insurance policies.

The Name

According to Financial Web, the name "rider" refers to the provision's lack of independent existence. Riders exist only when riding on existing policies.

Benefits

A rider can add or subtract benefits from a policy. For example, an accidental death benefit rider, which is known as double indemnity, adds a benefit by providing an additional amount to be paid to a beneficiary if the insured dies in an accident.

Term Policy Riders

According to Financial Web, a rider can be a term policy (ending after a set term), which is added to a permanent policy to contribute "additional or specialized coverage."

Waiver

A waiver is a kind of rider that excludes certain benefits from a policy, such as in the case of a life insurance rider that excludes benefits from being paid if the insured dies in a certain manner.

Costs

Riders that improve benefits typically include an addition to the size of the premium, while waivers do not, according to Financial Web.

References

• Financial Web