Adding a term insurance rider to a permanent policy can help care for your dependents when they need it the most.
Published Feb 7, 2024 11:20 a.m. PST · 1 min read Written by Renee Deveney Lead Writer Renee Deveney
Lead Writer | Life insurance
Renée Deveney is a former NerdWallet writer covering life insurance. Before joining NerdWallet, Renée led content creation at MoneyGeek, where she and her team covered a wide range of personal finance topics. She’s also written, edited and managed content on health, real estate and more. Renée holds a Bachelor of Arts in English from Rollins College.
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Life insurance expert | Life Insurance
Tony Steuer is a financial wellness advocate, podcaster and speaker, and the author of "Questions and Answers on Life Insurance." His advice has been featured in media outlets including The New York Times, The Washington Post, Fast Company, Forbes and CNBC. He has a bachelor of science degree in finance from California State University and holds the following designations: Chartered Life Underwriter (CLU), Life and Disability Insurance Analyst (LA) and Certified Personal and Family Finance Educator (CPFFE).
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A term insurance rider adds temporary coverage to a permanent life insurance policy for a set amount of time, usually 10, 20 or 30 years. Life insurance riders offer additional coverage to complement standard policies and the options vary among insurers.
Term life riders can typically be added to permanent policies, such as whole life insurance or universal life insurance , often for an extra fee. The payout from a term life rider can be used to cover temporary or short-term costs in the event of your death. For example, you may want to add a term life rider that lasts as long as your mortgage or until your children finish college so these larger expenses are covered if you die unexpectedly.
Let’s say you take out a permanent life insurance policy worth $100,000, which may be sufficient to cover your beneficiaries if you die after retirement or with fewer financial obligations. Adding a 20-year term life insurance rider worth $100,000 could help fulfill financial needs and bridge gaps if you die within that time frame.
It’s often cheaper to add a term life insurance rider to a permanent policy instead of buying a term policy now and a permanent life insurance policy later.
Most life insurance riders can’t be added to an existing policy. If you’re in the market for life insurance, explore all the riders and opt in to the ones you want or need when you buy a policy.
There are two main types of life insurance : term life insurance, which offers coverage for a fixed number of years and pays out if you die during the “term,” and permanent life insurance, which typically covers you for your entire life.
While the names can be confusing, a term life rider generally refers to temporary coverage added to a permanent life insurance policy. Some companies allow you to add a term life rider to a term life insurance policy to bump up your coverage even more, though this is rare.
Some of the most common life insurance riders include:
Assessing your needs can help you determine whether you need a permanent life insurance policy with a term life rider, or a different type of life insurance altogether. For many people, a standalone term life insurance policy is enough to provide their beneficiaries’ with a financial cushion.
Since the premiums for a term policy are usually cheaper than a permanent policy, you could save and invest the difference to plan ahead for yourself or your loved ones after the term ends. If you want to leave the option for permanent coverage open, consider adding a term conversion rider to your term life policy. This allows you to upgrade your policy to a permanent life insurance policy before a deadline specified by your insurer.
Frequently asked questions What is a term insurance rider?A term life insurance rider adds coverage to a permanent life insurance policy for a set number of years. This rider can help cover time-boxed or short-term financial responsibilities like a mortgage or care for young children.
Is a term insurance rider worth it?It depends on your financial needs and situation. A term insurance rider can give you the flexibility to add coverage based on your current and future financial obligations. If you’re interested in permanent life insurance, adding a term life insurance rider to your coverage will likely leave you with cheaper premiums than if you were to buy the full amount as permanent life insurance.
How do I add a term rider to my existing life insurance policy?Most companies only allow a term life rider to be added to the base policy upfront. However, some insurers may let you add a rider later for an extra cost. Contact your insurance company or agent to ask about adding riders to an existing policy.
How much does a term insurance rider cost?The cost of adding a term life rider to a permanent life insurance policy varies based on factors like your age, amount of coverage and lifestyle. Adding a term life rider will typically increase your monthly premium on a permanent policy, but is likely to be cheaper than having two separate policies.
What is a term insurance rider?A term life insurance rider adds coverage to a permanent life insurance policy for a set number of years. This rider can help cover time-boxed or short-term financial responsibilities like a mortgage or care for young children.
Is a term insurance rider worth it?It depends on your financial needs and situation. A term insurance rider can give you the flexibility to add coverage based on your current and future financial obligations. If you’re interested in permanent life insurance, adding a term life insurance rider to your coverage will likely leave you with cheaper premiums than if you were to buy the full amount as permanent life insurance.
How do I add a term rider to my existing life insurance policy?Most companies only allow a term life rider to be added to the base policy upfront. However, some insurers may let you add a rider later for an extra cost. Contact your insurance company or agent to ask about adding riders to an existing policy.
How much does a term insurance rider cost?The cost of adding a term life rider to a permanent life insurance policy varies based on factors like your age, amount of coverage and lifestyle. Adding a term life rider will typically increase your monthly premium on a permanent policy, but is likely to be cheaper than having two separate policies.
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Renée Deveney is a former NerdWallet writer covering life insurance. She is passionate about financial education and empowerment for all. See full bio.
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