You may live in a cookie-cutter suburban America where your life looks very similar to your neighbor. You may have a similar family size, similar home, or a similar vehicle, but that does not mean you have to have similar insurance. Every policyholder is unique and requires different coverage. While your home value may be comparable to others in your area, what is in your home is unique to you and deserves unique protection. Most insurance policies have standard benefits; riders can help you personalize your policy. Riders are designed to fill in the gaps between what may be a "standard" policy, to ensure the unique needs of each policyholder are covered. Insurance riders should not duplicate existing coverage, but rather provide extra protection and enhanced coverage in specific areas.
What is a Rider?
Just as a bike rider must have a bike, an insurance rider must have an insurance policy to "ride" upon. Riders are not independent or standalone products, they are only available when attached to a standard health, auto, home, or life insurance policy. By using riders, you can get coverage in a range of areas, without purchasing separate policies. Even if the policy you currently have does not meet all of your needs, attaching riders can be a cost-effective way to get the coverage you need without the hassle of obtaining an entirely new policy.
What Does a Rider Do?
Rider policies customize insurance plans to make them specific to the policyholder. Most riders supplement coverage, but they can also reduce coverage, or eliminate unnecessary benefits to try to reduce their insurance costs.
Types of Riders
Every type of insurance has dozens of optional riders. As a policyholder, you should carefully evaluate your existing coverage compared with your actual needs to determine whether a rider is right for you. Various types of popular riders are outlined below for each type of insurance coverage.
HEALTH INSURANCE RIDERS
With the constant changes in legislation, employer requirements, and healthcare coverage, it is crucial for policyholders to review their health insurance with a fine tooth comb to be sure they actually have coverage in the areas they need it most.
Sometimes, it is cheaper for policyholders to purchase a health care plan that does not include specific areas of coverage, like maternity care, and then purchase a rider policy if they decide to have children. Other common health insurance riders include elimination riders for preexisting conditions, elective cosmetic surgery, infertility treatment, treatment required for medical injuries obtained during the act of committing a felony, organ transplants, self-inflicted injuries, and STDs.
LIFE INSURANCE RIDERS
Life insurance is a fairly cut and dry area of insurance. Most policies offer a basic level of coverage with industry standard conditions, restrictions, and requirements. Common life insurance riders include the following:
|Accelerated Death||This type of rider is specifically designed to help those diagnosed with a terminal illness. This allows your insurance policy to provide financial assistance in the event that you become diagnosed with a terminal illness.|
|Accidental Death||While most life insurance policies cover accidental death, the Accidental Death Benefit Rider can provide additional benefits if the death occurs as the result of an accident. In some cases, this rider may double the benefits. Accidental deaths often incur more medical expenses and more expenses for the surviving family members so additional coverage is helpful.|
|Family Income||This rider specifies how your benefit is paid out. Rather than a lump sum, a family income benefit rider specifies that your life insurance benefits will be paid out in equal on a monthly basis, for a set number of months. In essence, this provides a continued "monthly income" for your family until the policy runs out. This is helpful for budgeting purposes, but may make it more difficult for family members to pay for large payments such as medical bills or funeral costs.|
|Long-Term Care Rider||While many individuals choose to purchase a separate long-term care policy, coverage for long-term care can also be added to a life insurance policy to provide coverage for needs such as a nursing home, hospice care, or other long-term care situations.|
HOME INSURANCE RIDERS
Basic property insurance policies offer a lump sum coverage based on several factors and a complicated mathematical equation, which is used to determine adequate coverage. Rather than relying on an industry calculator, policyholders should evaluate not only what they own, but rather what it is worth and then make the insurance policy match. These common homeowner insurance riders fill the gaps in coverage.
|Valuables||A general home insurance policy provides an overall lump sum to the entire contents of your home. Within that lump sum, there are often limits for specific items such as an electronics limit, jewelry limit, and clothing limit. If you own costly flat screen TVs, electronic gadgets, expensive jewelry, collectibles, or fine art, your policy will likely not cover the full value of your items. The only answer to this common problem is an additional rider with an itemized list often requiring independent appraiser documents.|
In a world booming with small business owner and work-from-home moms, a rider policy to protect your home-based business is important. For individuals who use their home as their main office with visitors, business meetings, inventory, etc., a business rider is an absolute must. A typical home insurance policy does not cover any losses to a home based business unless you have this specified rider.
|Flood Coverage||Flood insurance is almost never automatically included in a home insurance policy. Therefore, if you live in an area prone to flooding, a rider is a wise investment. The rider should specify whether you are covered for all flooding, sewer and drainage damage, water runoff, accidental, or various other types of flooding.|
|Accidental Loss||Most homeowner's policies cover "named perils". It is important to know what these perils are. Most common are theft, fire and wind damage. Accidents are often not covered, but they are one of the most common causes of loss. A rider policy can cover accidents so if you drop your wedding ring down the drain, or your toddler destroys your kitchen cabinets, you may be able to file a claim and receive benefits.|
AUTO INSURANCE RIDERS
The average new vehicle today has nearly 30 individual computer components and thousands of moving parts. With the increase of motor vehicle technology, and increased risks on the road, car insurance providers encourage customizing your policy by adding a few riders.
|Usually, when you are in an accident and replace parts of your car, the insurance company will give you a depreciated value depending on how old your vehicle is. So, if you drive an older vehicle, the less money you get for repairs. A depreciation coverage rider provides you with the full value of the parts, without any deductions taken for depreciation. This ensures that repairs are paid for in full, regardless of your vehicle age.|
|Some insurance include roadside assistance with their standard auto policy, but many do not. This provides the help of a tow-truck, mechanic, or even help getting your keys if you have a habit of locking them in your car.|
|Invoice Value Cover||This rider is specifically for new cars only. If your car is less than three years old, typical coverage is at 95% of the manufacturer price. To get 100% list price coverage, a rider is required.|
|Voluntary Deductible||If you are looking to save money on auto insurance, consider a voluntary deductible rider. This requires you to cover the expenses of damage to up to a particular amount. The more you are willing to pay for actual damage, the less you pay in your monthly payments.|
LONG-TERM CARE INSURANCE RIDERS
Long-term care insurance is often viewed as one of the most complex forms of insurance. Some long-term care policies include these benefits, while others include those benefits. Finding the perfect policy can seem impossible. That is why there are nearly a dozen standard long-term care insurance riders providing policyholders an "a la carte" type pricing structure to get exactly what you need and nothing you don't.
|Inflation Protection||$1000 today will only get you approximately $300 in ten years. Inflation protection is crucial because of the rising costs of healthcare are and nursing home care across the country.|
|Waiver of Elimination Period||The typical policy includes a 90-day waiting period before benefits kick in. This can add up to a very expensive three months. There are several different types of riders that reduce, or eliminate this waiting period so benefits begin as soon as you need them.|
|Restoration of Benefits||Many individuals require long-term care more than once in their life. For example, if you get in a car accident and require serious rehabilitation and then years later you are diagnosed with Parkinson's. A Restoration of Benefits ride provides your full policy payout as long as you go claim free for a certain period of time.|
|Spouse Sharing||This rider allows one spouse to use his or her benefits completely and then, if necessary, use their partner’s pool of benefits as well. This is a risky move because couples are gambling that only one of them will require long-term care during their lifetime.|
|Spouse Survivorship||This is a benefit for couples who both pay their policies for several years, if one partner dies; the survivor's policy becomes instantly paid-up for life.|
|Limited Payment||The price of a long-term care policy is among the cheapest insurance you can buy, but additional riders provide payment options that decrease your out of pocket over time, so the older you get, the less you pay.|
Braden Insurance Agency has been providing auto insurance, homeowners, health insurance, life, long term care, & medicare supplement insurance to Louisville, KY area residents since 1961.