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Life Insurance Riders, Part 2: Premium Riders

There are many life insurance riders that can affect your premium. Some provide you with a return of your premium while others waive your premiums during a time of disability. These premium riders can be a real insurance policy saver and add additional values that many consumers love.

Return of premium rider

When you buy a term insurance policy, you are getting a death benefit for a limited period of time, and that is it. There is no cash value accumulation, no growth, and no guaranteed death benefit for life. While this doesn’t decrease the importance of having a term policy and certainly doesn’t undo the benefit of this low premium life insurance solution, it can leave some consumers feeling cold. And that is where a return of premium rider can come in handy. With a return of premium rider you will pay an additional premium for your term insurance policy and at the end of the term, if you do not die and trigger a death benefit payment, the insurance company will return your premium payments to you.

There is no interest collected or paid on the insurance premiums so for some investors, this may not be the best usage of the return of premium rider expense-and an expense it is. A return of premium rider can cost as much as an additional 100% of your premiums which makes it a pretty big decision to make. And remember, you must pay all your premiums in full and on time in order to get the return of premium. If you do not, you may lose the payments you’ve made thus far for the return of premium rider.

Waiver of premium rider

If you should become disabled it may be difficult if not impossible to pay your premium every month, quarter or year. A waiver of premium rider is your insurance company’s way of helping out in this event. If you have a waiver of premium rider and can prove your disability to your insurance company’s standards, then they will waive your premium payments for a limited period of time. While you can pay for insurance premiums out of the benefits paid out by a disability policy it can be more cost effective to invest in a waiver of premium rider and waive the premium if you become disabled. In addition, it may be extremely helpful to your budget since your disability policy may only pay enough to keep your living expenses in check.

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