Indexed Universal Life Insurance (IUL) is gaining popularity year after year because this unique life insurance product provides an affordable death benefit combined with cash value accumulation.
For individuals who prefer financial instruments not constrained by regulatory rules and understand the importance of building assets that deliver tax-exempt income, an IUL supremely fits the bill.
Assuming that you, the reader, already understand how an IUL can deliver considerable wealth in retirement planning, there are valuable riders that should be seriously considered at the time of purchase.
What Are Indexed Universal Life Riders?
A simple analogy would be comparing your IUL to a new vehicle with all the bells and whistles to customize your sweet ride. Insurance riders provide living benefits that are specially designed to protect your beneficiary when you die and protect yourself while you’re alive.
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Does Every Insurer Offer Indexed Universal Life Riders?
In almost every situation, life insurance applicants can add optional insurance riders when purchasing coverage. The available riders will vary by policy type and the insurance company offering the product.
Yes, almost every rider you add to your policy will increase your policy’s premium, but the increase is typically well worth it when you consider all the things that can go wrong during your life other than your untimely demise.
There are many riders to choose from. Below, we’ll drill down into the most popular riders that can be added to Indexed Universal Life insurance, describing each one and discussing who they would be best suited for.
Top Living Benefits Riders for Your Indexed Universal Life Insurance
| Rider | Benefit | Who Should Consider |
|---|---|---|
| Accelerated Death Benefit | Advances a portion of the death benefit if the insured is diagnosed with a terminal, chronic, or critical illness. The remaining balance goes to the beneficiary. | Individuals with health insurance but who want additional coverage for costs associated with terminal illnesses not covered by typical health plans. |
| Long-Term Care Rider | Pays a monthly benefit for long-term care services. | Seniors or individuals without long-term care financial support should consider this rider, as many stand-alone long-term care policies are expensive and hard to qualify for. |
| Disability Income Rider | Provides a monthly benefit if the insured becomes temporarily or permanently disabled and unable to work. | Applicants without short- or long-term disability coverage who want a more affordable option for disability protection. |
Riders vary by company, so always check the terms and conditions associated with the rider(s) you are considering.
Riders that Broaden Your Coverage
| Rider | Benefit | Who Should Consider |
|---|---|---|
| Guaranteed Insurability Rider | Allows the insured to buy additional insurance coverage at set intervals without having to prove insurability. | Individuals expecting major life events, such as having children, or wanting the flexibility to increase their death benefit without medical underwriting. |
| Accidental Death Benefit Rider | Increases the death benefit by a predetermined amount if the insured dies due to an accident. | Applicants looking for affordable additional coverage. |
| Child Term Rider | Provides term insurance for dependent children, which can be converted to permanent insurance later. | Any applicant with children or planning to have children should consider this rider to avoid funeral costs in case of a tragedy. |
| Spouse Insurance Rider | Allows the insured to add term insurance for a spouse at a lower cost compared to a separate term policy. | Married applicants looking for more affordable life insurance coverage for their spouse should consider this option. |
Policy Protection Riders for Your IUL
| Rider | Benefit | Who Should Consider |
|---|---|---|
| Overloan Protection Rider | Allows the insured to take the maximum amount of policy loans without causing the IUL to lapse, ensuring the death benefit remains intact. | Insured individuals managing a Life Insurance Retirement Plan (LIRP) funded with an IUL should consider this rider for long-term financial security. |
Riders vary by company, so always check the terms and conditions associated with the rider(s) you are considering.
In Conclusion
When purchasing an IUL as part of your retirement plan, there’s a lot to consider. Most of the riders listed are related to life events that are likely to happen to every applicant, but it’s essential to plan for these events at the time of purchase.
Yes, rates and the rate of wealth accumulation are important parts of the shopping process, but an applicant well-informed about optional riders will be in a better position when these life events take place.
FAQs About Indexed Universal Life Riders
What are Indexed Universal Life Riders?
Riders are optional features that you can add to your life insurance policy to enhance or customize coverage, providing additional protection based on your needs.
Do all insurance companies offer IUL riders?
Not all insurance companies offer the same riders. It’s important to compare options and check with insurers to understand which riders they offer for their IUL policies.
Will adding riders increase my premium?
Yes, adding riders typically increases your premium. However, the added protection and benefits provided by these riders often justify the extra cost.
What is the most popular IUL rider?
The Accelerated Death Benefit rider is among the most popular, as it offers financial relief for terminal, chronic, or critical illness before the policyholder passes away.
Can I add riders to my policy after purchasing?
In most cases, riders need to be added at the time of policy purchase, but some policies allow you to add certain riders later, depending on the insurer’s terms.
