For this story about riders, I decided to do a mini-survey of a few very large national insurers. The results were fascinating.
Each responding company has its own family of riders, meaning the survey represents a vast profusion of riders. Today, well look at some of them, and also at what my survey found is the most popular grouping of riders, or “packages,” in todays market.
Heres a recap, organized by base policy class:
Traditional permanent and term life insurance: The most popular riders here are disability waiver of premium, accidental death, and spouse/child coverage. Decreasing term and level term are also popular, as are premium waivers on juvenile business and guaranteed purchase options. (GPOs providing long-term care insurance is a new wrinkle.)
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More novel riders include inflation upgrades, critical-illness-type accelerated benefits, and terminal-illness-type accelerated benefits. There is even a disability income rider.
Universal life insurance: Waiver, accidental death, spouse/child, and GPO again head the list. The term riders are not as popular. For second-to-die UL, there are riders for policy split and for various estate protection purposes.
Variable Life: Here again, waiver, accidental death, spouse/child, and GPO head the list. Term riders are not popular. DI is mentioned.
Annuities: Waiver-of-premium riders are mentioned. Also, there are numerous popular riders based on the death or critical illness of the contract holder prior to annuitization. On fixed and variable annuities, these riders waive surrender charges. On VAs, these riders can enhance earnings on the contract, and even pay special benefits in the event of critical illness. (Maybe CI insurance is more alive than some people think!)
These days, VAs also have various guaranteed minimum death benefit arrangements, and even guaranteed minimum annuity benefits (regardless of performance of the underlying assets). These features, sometimes expressed as options, are typically embedded in the base policy wording and are therefore not riders (strictly speaking).