Life insurance is an effective tool to protect you and your family against a significant risk: your death. While you may not feel like death is likely anytime soon, the fact is that it’s possible at any time. If you pass away, your family could face daunting financial challenges. Life insurance helps them overcome those obstacles.
A wide range of life insurance policies are available. In fact, you may be overwhelmed by the choices. How do you know which type is right for you? And how do you know how much coverage is right for you?
Even after you choose your policy, you may also need to select from a menu of optional features and benefits, often referred to as riders. Riders are designed to offer additional levels of protection. Some increase your premiums, but others don’t. The decision to choose a particular rider should be based on your unique needs and goals.
Below are a few of the most popular riders and why they might be right for you. A financial professional can help you analyze your needs and develop the appropriate strategy.
Waiver of Premium
This is a common rider that’s often included in the base policy at no additional charge. It effectively waives your life insurance premium if you’re unable to work because of a disability. It’s protection against losing your life insurance along with your ability to work. You may think disability is an unlikely possibility. This rider is usually low-cost, however, so it may make sense.
Your health will likely change as you get older. It’s possible that you could suffer an injury or develop an illness that makes it difficult for you to qualify for additional life insurance. That could be problematic if you need more coverage in the future.
A guaranteed* insurability rider can help you get additional insurance even if your health declines. Assume you purchase a policy when you’re healthy and choose the guaranteed* insurability rider. Then you suffer a serious health crisis. Your rider allows you to purchase additional coverage in the future at your original health classification, without going through underwriting.
Accelerated Death Benefit
Life insurance is meant to provide financial relief after you pass away. However, there could be instances in which you and your family need the funds before your death. For example, you may need the life insurance to pay for medical bills or hospice care.
An accelerated death benefit rider allows you to take a portion of your death benefit while you’re still alive if you’re battling a terminal illness. Your family can then use it to pay for care, medical bills or any other expenses. Each policy has different rules about what does and does not qualify as a terminal illness, so be sure to read the language carefully.
Return of Premium
Many people opt for term life insurance because it’s usually more affordable than permanent. Term insurance provides only temporary protection, however, and your premiums don’t accumulate as tax-deferred cash value. If you outlive the term, you don’t get back your past premiums.
A return of premium rider allows you to get back some of those premium dollars at the end of the term. While this may seem attractive, be aware that these riders often increase the premium significantly. It may be more cost-effective to take the lower premium and simply save the difference.
Ready to plan your life insurance protection strategy? Let’s talk about it. Contact us today at M&P Personal Financial Planning. We can help you analyze your needs and choose the policy that’s right for you. Let’s connect soon and start the conversation.
*Guarantees, including optional benefits, are backed by the claims-paying ability of the issuer, and may contain limitations, including surrender charges, which may affect policy values.
Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency.
17965 – 2018/9/4