What to Know About Life Insurance Riders

What is a Life Insurance Rider?

Your life insurance policy can be tailored with optional provisions called riders. In today’s market, riders commonly provide living benefits (accelerating part of the death benefit for terminal, chronic, or critical illness, or to fund long-term care), disability protections (waiving premiums or paying monthly income), and family or value features (child/spouse coverage, accidental death, guaranteed insurability, return of premium, paid-up additions, no-lapse guarantees) (NAIC) (III). Accelerated benefits tied to terminal or chronic illness generally fall under Internal Revenue Code §101(g), while tax‑qualified long‑term care riders are governed by §7702B; IRS Publication 525 explains when these benefits are taxable or excludable. Recent changes also shape how riders are designed and illustrated—for example, the 2021 modernization of §§7702/7702A affects funding limits on permanent policies, and 2023’s IUL illustration update (often called AG 49‑B) curbs aggressive illustrated credits, including those delivered via riders (NAIC). On the buying experience side, many carriers now use AI‑accelerated underwriting and embedded digital distribution to issue coverage faster—paired with growing governance expectations under the NAIC’s AI Model Bulletin and state rules such as Colorado’s guidance and implementation (Deloitte 2025) (EY 2025).

Life Insurance Rider Fast Facts

Many policies include a terminal‑illness accelerated death benefit at no added premium; when used, the payout reduces the remaining death benefit and may be subject to an administrative fee or actuarial discount (NAIC Buyer’s Guide) (NerdWallet).
Typical rider costs in today’s market: waiver of premium roughly +10%–25% of base premium; return of premium term about +30%–50% vs. comparable level term; accidental death commonly about $4–$10 per month per $100,000; children’s term about $5 per $1,000 per year; standard term conversion is often included at $0 within a set window (Policygenius) (Forbes Advisor) (NerdWallet).
Eligibility and triggers vary by insurer and state. Terminal‑illness accelerations generally require a physician‑certified life expectancy within 12–24 months; chronic‑illness riders typically require inability to perform at least two of six ADLs for 90 days or severe cognitive impairment; tax exclusions and IRS per‑diem limits for care benefits are detailed in Publication 525 and §101(g)/§7702B.
Carrier differences matter: Prudential often includes a terminal‑illness benefit and offers a chronic‑illness BenefitAccess Rider on eligible permanent policies; John Hancock’s Vitality program ties wellness to potential rewards; Guardian and MassMutual emphasize whole‑life customization (e.g., Paid‑Up Additions); State Farm and Legal & General America offer straightforward rider menus with accelerated death benefit, waiver, children’s term, and accidental death options—check product and state availability (Prudential overview) (John Hancock Vitality) (Guardian) (MassMutual) (State Farm) (Legal & General America).
Riders are subject to evolving rules. The NAIC’s accelerated benefits model standardizes disclosures; IUL illustrations were tightened in 2023; and AI‑related underwriting is under new governance expectations—review current disclosures and specimen forms before buying (NAIC) (NAIC AG 49‑B) (NAIC AI Bulletin).

Why Do I Need to Know About Riders?

Riders can turn a basic policy into a more responsive safety net. Living‑benefit riders create liquidity during serious illness or long‑term care needs; disability riders help keep coverage intact or replace income; and family/value riders tailor protection to life stages. Health and access trends reinforce their value in 2025: about 23% of U.S. adults experienced any mental illness and 6% serious mental illness in 2023, and mental health remains the top telehealth diagnosis nationally—factors that argue for disability riders with strong mental/behavioral provisions and convenient virtual‑care supports (SAMHSA) (Fair Health). With the American Cancer Society projecting over 2 million new cancer cases in 2025, critical‑illness or cancer riders can help fund non‑medical costs, while aging‑related cognitive needs drive interest in chronic‑illness or LTC‑qualified riders that trigger on ADLs or cognitive impairment (ACS 2025) (Alzheimer’s Association 2025).

Before adding riders, compare triggers, costs, and tax treatment in insurer disclosures and IRS guidance—terminal/chronic accelerations are generally tax‑favored under §101(g) within limits—and note current rules that affect illustrations (AG 49‑B) and AI‑enabled underwriting (IRS Pub 525) (NAIC) (NAIC).

Shop deliberately so you’re protected without overpaying. Ask for side‑by‑side illustrations that show rider charges, qualifying criteria (e.g., 2 of 6 ADLs for ≥90 days for chronic‑illness benefits), whether benefits are paid via discount or lien, and how accelerations affect residual death benefit and cash value. If you’re evaluating indexed UL features, understand that 2023 illustration rules limit how riders and index enhancements can be shown. For AI‑accelerated underwriting, expect increased disclosures and fairness testing as states implement NAIC guidance (NAIC) (AG 49‑B) (AI Bulletin) (Colorado DOI).

What Are the Different Kinds of Life Insurance Riders?

Riders fall into three broad groups: living‑benefit riders (terminal‑illness accelerated death benefits, chronic‑illness riders under §101(g), critical‑illness, and tax‑qualified long‑term care riders under §7702B), disability‑related riders (waiver of premium or monthly deductions and disability income), and customization/value riders (child/spouse coverage, guaranteed insurability, accidental death, return of premium, term or paid‑up additions riders, no‑lapse and overloan protection) (NAIC) (III). The right riders depend on your goals, health, budget, and whether you’re buying term or permanent coverage.

Rider	Benefit
Child insurance rider	Provides term coverage for eligible children (often one rider covers all eligible children) with the right to convert to permanent insurance at a future age without new medical underwriting. Typical cost is about $5 per $1,000 of coverage per year (Policygenius) (NerdWallet).
Spouse insurance rider	Adds term coverage on a spouse or other insured—often convertible later to a separate permanent policy without new medical evidence, subject to carrier limits and state approvals (III).

What Life Insurance Riders Do I Need?

The right mix depends on budget, health, underwriting eligibility, and whether you want term simplicity or permanent policy flexibility. For living benefits, compare chronic‑illness and LTC‑qualified designs carefully. For example, Prudential’s BenefitAccess Rider provides chronic‑illness acceleration on eligible permanent policies, while many carriers include terminal‑illness ADB at no charge; John Hancock’s Vitality program adds wellness incentives; whole‑life leaders Guardian and MassMutual support cash‑value growth via Paid‑Up Additions and strong waiver/guaranteed insurability options; State Farm and Legal & General America focus on straightforward menus for term buyers (Prudential) (John Hancock) (Guardian) (MassMutual) (State Farm) (LGA). Many applications now use accelerated underwriting and instant‑issue flows—good fits if you prefer faster decisions with fewer exams (Deloitte 2025) (EY 2025).

As you begin to look for life insurance coverage, here are a few guiding questions:

What income stream would your family need if you died? If beneficiaries prefer predictable cash flow, consider a family income benefit rider; if a lump sum is sufficient, ensure the base death benefit is adequate (NAIC).
Are major financial events ahead (home, children, business)? Riders like guaranteed insurability or a term rider on permanent coverage can add flexibility without new medical underwriting (III).
Are you a parent planning to support college costs? Children’s term riders are typically economical (~$5 per $1,000/year) and often convertible to permanent insurance later (Policygenius) (NerdWallet).
Do family health risks (e.g., cancer, cardiovascular disease) suggest value in a critical‑illness or cancer rider? The American Cancer Society projects over 2 million new U.S. cancer cases in 2025—lump‑sum riders can help offset non‑medical costs (ACS 2025).
If you needed help with daily activities or had cognitive impairment, would savings cover care? Compare a chronic‑illness ABR under §101(g) versus an LTC‑qualified rider under §7702B; both typically require ≥2 of 6 ADLs for ≥90 days or severe cognitive impairment, with IRS per‑diem limits for tax‑favored benefits (IRS Pub 525).
Is your job or hobby hazardous? Accidental death riders cost only a few dollars per month per $100,000 but have exclusions and time‑limit definitions of “accident”—read the fine print (Policygenius).

Speaking with an insurance agent can help you narrow options and choose the right amount of coverage. Request current specimen riders and illustrations showing costs, triggers, elimination periods, and how accelerations affect residual death benefit and cash values. If evaluating indexed UL, ask how 2023’s AG 49‑B limits are reflected in the illustration; for accelerated underwriting, ask about data sources and consumer protections under the NAIC’s AI bulletin and applicable state rules (NAIC AG 49‑B) (NAIC AI) (Colorado DOI).

What’s Next?

Riders go beyond the basics of life insurance. If you want a refresher on how base coverage works, review our FAQs on term life insurance and permanent life insurance, then pair that with consumer resources from the NAIC and the tax overview in IRS Publication 525 for accelerated benefits and LTC per‑diem limits.
Ready to shop? Compare companies on which riders are included at no cost (e.g., terminal‑illness acceleration) versus optional (waiver, child term, accidental death, chronic‑illness/LTC). Look for innovations like AI‑accelerated underwriting, wellness programs, or hybrid life/LTC designs that match your goals, and then check quotes with life insurance after reviewing disclosures and illustration constraints (e.g., AG 49‑B for IUL) (III) (NAIC) (Deloitte 2025).

Riders that affect death benefit payments

Rider	Affects
Family income benefit rider	Pays the death benefit as an income stream instead of a lump sum, which can help beneficiaries budget. Payment schedules and interest assumptions are contract‑specific—review how settlement options impact total payouts (NAIC).
Cost of living rider	Periodically increases the policy’s death benefit to help offset inflation based on stated metrics. Charges and caps apply; availability varies by insurer and policy type (III).
Accidental death or “double indemnity” rider	Adds an extra amount if death results from a qualifying accident as defined. Typical cost is a few dollars per month—often cited around $4–$10 per month per $100,000 of additional accidental coverage; exclusions and time limits apply (Policygenius) (NerdWallet).

What Life Insurance Riders Do I Need?

As you begin to look for life insurance coverage, here are a few guiding questions:

What income stream would your family need if you died? If beneficiaries prefer predictable cash flow, consider a family income benefit rider; if a lump sum is sufficient, ensure the base death benefit is adequate (NAIC).
Are major financial events ahead (home, children, business)? Riders like guaranteed insurability or a term rider on permanent coverage can add flexibility without new medical underwriting (III).
Are you a parent planning to support college costs? Children’s term riders are typically economical (~$5 per $1,000/year) and often convertible to permanent insurance later (Policygenius) (NerdWallet).
Do family health risks (e.g., cancer, cardiovascular disease) suggest value in a critical‑illness or cancer rider? The American Cancer Society projects over 2 million new U.S. cancer cases in 2025—lump‑sum riders can help offset non‑medical costs (ACS 2025).
If you needed help with daily activities or had cognitive impairment, would savings cover care? Compare a chronic‑illness ABR under §101(g) versus an LTC‑qualified rider under §7702B; both typically require ≥2 of 6 ADLs for ≥90 days or severe cognitive impairment, with IRS per‑diem limits for tax‑favored benefits (IRS Pub 525).
Is your job or hobby hazardous? Accidental death riders cost only a few dollars per month per $100,000 but have exclusions and time‑limit definitions of “accident”—read the fine print (Policygenius).

What’s Next?

Riders go beyond the basics of life insurance. If you want a refresher on how base coverage works, review our FAQs on term life insurance and permanent life insurance, then pair that with consumer resources from the NAIC and the tax overview in IRS Publication 525 for accelerated benefits and LTC per‑diem limits.
Ready to shop? Compare companies on which riders are included at no cost (e.g., terminal‑illness acceleration) versus optional (waiver, child term, accidental death, chronic‑illness/LTC). Look for innovations like AI‑accelerated underwriting, wellness programs, or hybrid life/LTC designs that match your goals, and then check quotes with life insurance after reviewing disclosures and illustration constraints (e.g., AG 49‑B for IUL) (III) (NAIC) (Deloitte 2025).

Living or “accelerated” benefit riders

Rider	Benefit
Disability income rider	Pays a monthly income if you meet the policy’s disability definition. Coordinates with any standalone disability coverage; waiting periods, offsets, and benefit periods vary by carrier and product (III). Consider riders without restrictive mental/behavioral limits given elevated behavioral health needs (SAMHSA).
Long term care (LTC) rider	A tax‑qualified §7702B rider adds LTC insurance benefits to the life policy. Benefits generally trigger when a licensed practitioner certifies inability to perform ≥2 of 6 ADLs for at least 90 days or severe cognitive impairment. Payouts are typically excludable from income up to IRS inflation‑indexed per‑diem limits; elimination periods, monthly caps, and charges apply (IRS Pub 525).
Critical illness rider	Pays a lump sum upon diagnosis of specified conditions (e.g., heart attack, stroke, cancer) as defined in the rider. Covered illnesses, survival periods, and partial‑benefit schedules vary by carrier and state; tax treatment depends on design (accelerated vs. supplemental) (III) (NAIC).
Accelerated death benefit (ADB) rider	Accelerates part of the death benefit for a qualifying terminal or chronic illness. Terminal‑illness accelerations are often included at no extra premium and are generally tax‑favored under §101(g); accelerations reduce the remaining death benefit and may incur administrative fees/discounts. Chronic‑illness ABRs use ADL/cognitive triggers similar to LTC but are not LTC‑qualified unless filed under §7702B (IRS Pub 525) (NAIC).

Riders that affect death benefit payments

What Life Insurance Riders Do I Need?

As you begin to look for life insurance coverage, here are a few guiding questions:

What income stream would your family need if you died? If beneficiaries prefer predictable cash flow, consider a family income benefit rider; if a lump sum is sufficient, ensure the base death benefit is adequate (NAIC).
Are major financial events ahead (home, children, business)? Riders like guaranteed insurability or a term rider on permanent coverage can add flexibility without new medical underwriting (III).
Are you a parent planning to support college costs? Children’s term riders are typically economical (~$5 per $1,000/year) and often convertible to permanent insurance later (Policygenius) (NerdWallet).
Do family health risks (e.g., cancer, cardiovascular disease) suggest value in a critical‑illness or cancer rider? The American Cancer Society projects over 2 million new U.S. cancer cases in 2025—lump‑sum riders can help offset non‑medical costs (ACS 2025).
If you needed help with daily activities or had cognitive impairment, would savings cover care? Compare a chronic‑illness ABR under §101(g) versus an LTC‑qualified rider under §7702B; both typically require ≥2 of 6 ADLs for ≥90 days or severe cognitive impairment, with IRS per‑diem limits for tax‑favored benefits (IRS Pub 525).
Is your job or hobby hazardous? Accidental death riders cost only a few dollars per month per $100,000 but have exclusions and time‑limit definitions of “accident”—read the fine print (Policygenius).

What’s Next?

Riders go beyond the basics of life insurance. If you want a refresher on how base coverage works, review our FAQs on term life insurance and permanent life insurance, then pair that with consumer resources from the NAIC and the tax overview in IRS Publication 525 for accelerated benefits and LTC per‑diem limits.
Ready to shop? Compare companies on which riders are included at no cost (e.g., terminal‑illness acceleration) versus optional (waiver, child term, accidental death, chronic‑illness/LTC). Look for innovations like AI‑accelerated underwriting, wellness programs, or hybrid life/LTC designs that match your goals, and then check quotes with life insurance after reviewing disclosures and illustration constraints (e.g., AG 49‑B for IUL) (III) (NAIC) (Deloitte 2025).

Rider	Benefit
Return of premium rider	Returns some or all base premiums if the term policy stays in force to the end of the term (terms vary). Expect higher ongoing premiums—commonly about 30%–50% more than comparable level term—so weigh the opportunity cost (Forbes Advisor) (Investopedia).
Term conversion rider	Lets you convert term insurance to permanent coverage without new medical evidence within a set window; standard conversion is often included at no added premium, while extended privileges may require a specific rider (NerdWallet) (Policygenius).
Guaranteed insurability rider	Allows additional coverage purchases at specified ages/events without new medical underwriting—useful if income grows or health risks emerge. Availability and option dates are carrier‑ and state‑specific (III).

Living or “accelerated” benefit riders

Riders that affect death benefit payments

What Life Insurance Riders Do I Need?

As you begin to look for life insurance coverage, here are a few guiding questions:

What income stream would your family need if you died? If beneficiaries prefer predictable cash flow, consider a family income benefit rider; if a lump sum is sufficient, ensure the base death benefit is adequate (NAIC).
Are major financial events ahead (home, children, business)? Riders like guaranteed insurability or a term rider on permanent coverage can add flexibility without new medical underwriting (III).
Are you a parent planning to support college costs? Children’s term riders are typically economical (~$5 per $1,000/year) and often convertible to permanent insurance later (Policygenius) (NerdWallet).
Do family health risks (e.g., cancer, cardiovascular disease) suggest value in a critical‑illness or cancer rider? The American Cancer Society projects over 2 million new U.S. cancer cases in 2025—lump‑sum riders can help offset non‑medical costs (ACS 2025).
If you needed help with daily activities or had cognitive impairment, would savings cover care? Compare a chronic‑illness ABR under §101(g) versus an LTC‑qualified rider under §7702B; both typically require ≥2 of 6 ADLs for ≥90 days or severe cognitive impairment, with IRS per‑diem limits for tax‑favored benefits (IRS Pub 525).
Is your job or hobby hazardous? Accidental death riders cost only a few dollars per month per $100,000 but have exclusions and time‑limit definitions of “accident”—read the fine print (Policygenius).

What’s Next?

Riders go beyond the basics of life insurance. If you want a refresher on how base coverage works, review our FAQs on term life insurance and permanent life insurance, then pair that with consumer resources from the NAIC and the tax overview in IRS Publication 525 for accelerated benefits and LTC per‑diem limits.
Ready to shop? Compare companies on which riders are included at no cost (e.g., terminal‑illness acceleration) versus optional (waiver, child term, accidental death, chronic‑illness/LTC). Look for innovations like AI‑accelerated underwriting, wellness programs, or hybrid life/LTC designs that match your goals, and then check quotes with life insurance after reviewing disclosures and illustration constraints (e.g., AG 49‑B for IUL) (III) (NAIC) (Deloitte 2025).