CARD T146
Term Rider
A rider adding term coverage to a policy. It may increase protection for a limited period.
How it works
A term rider attaches temporary life coverage to a base policy. Depending on its design, it can cover the base insured or another specified person. Its amount, duration, renewal, and conversion rights are stated in the rider. The rider can expire while the permanent base policy remains in force. [19]
A $100,000 whole life policy carries a $200,000 twenty-year term rider on the same insured. During the rider term, a death covered by both can pay $300,000. After the rider expires, the base benefit can remain.
A term rider is additional temporary coverage; extended term is a nonforfeiture use of existing cash value.
CARD T147
Other-Insured Rider
A rider covering an additional person under the base policy. A spouse or child may be included under its terms.
How it works
An other-insured rider adds coverage on a person other than the base insured, often a spouse or child. That person’s death triggers the rider’s benefit rather than the base insured’s death benefit. Coverage amounts, eligible ages, termination, and conversion privileges vary. A family rider does not necessarily cover every family member equally. [19]
A policy insures a parent for $200,000 and a child under a $10,000 rider. A covered death of the child produces the $10,000 rider benefit, not the parent’s $200,000 benefit.
Keep the base insured, other insured, owner, and beneficiary distinct.
CARD T148
Cost-of-Living Rider
A rider adjusting coverage or benefits using a specified inflation measure. Adjustments and any premium changes follow its terms.
How it works
A cost-of-living adjustment rider links potential benefit increases to an inflation measure or stated formula. On a life policy, it can provide a way to increase insurance as prices rise, subject to limits and any required premium. It does not necessarily make extra coverage free. On disability-income coverage, a COLA rider instead commonly adjusts benefits during a qualifying claim; distinguish the product in the question. [19]
A life rider permits a 3% increase on a $100,000 benefit. If all conditions are met, the increased benefit is $103,000, with any additional premium determined under the rider.
An inflation-linked increase in coverage is different from interest credited to cash value.
CARD T149
Long-Term Care Rider
A rider adding benefits for qualifying long-term care needs. It may affect the life policy’s remaining death benefit.
How it works
A long-term care rider can provide benefits when the insured meets defined care needs. Many life/LTC riders accelerate the death benefit; some also provide an extension of benefits. A tax-qualified chronic-illness trigger generally requires a licensed health care practitioner’s certification of inability to perform at least two activities of daily living without substantial assistance for an expected period of at least 90 days, or severe cognitive impairment requiring substantial supervision. Covered services follow a plan of care and the rider’s requirements. Reimbursement and indemnity designs pay differently. [16] [17] [18]
A qualifying rider pays benefits for covered long-term care and reduces the life policy’s remaining death benefit under its acceleration formula. An extension rider, if included, may continue benefits after the acceleration pool is used.
The expected 90-day functional impairment is not automatically a 90-day elimination period. Eligibility and the waiting period are separate tests.
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Practice questions
Select an answer, then check it to see why each option is right or wrong.
T146 · Term Rider
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T147 · Other-Insured Rider
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T148 · Cost-of-Living Rider
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T149 · Long-Term Care Rider
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Sources & further reading
Original explanations and practice scenarios informed by the following regulatory, legal, and product resources. State examples are not presented as nationwide deadlines or requirements.