Life insurance is crucial to any financial plan, providing security and protection for individuals and their loved ones. However, many clients may not be aware of the various policy riders available to enhance their coverage. In this article, we’ll look at common policy riders that advisors can discuss with clients to enhance their life insurance flexibility and benefits. 

The importance of policy riders

Clients should consider policy riders in their life insurance coverage for several important reasons:

1. Customization and flexibility: Whether they require additional benefits for long-term care, disability income, or coverage for their children or spouse, riders offer clients the flexibility to customize their policies accordingly.
2. Enhanced protection: Riders provide additional layers of protection beyond basic death benefits and can provide financial support during unexpected illnesses or financial hardships.
3. Living benefits: Many riders offer living benefits, which can be valuable in situations such as chronic illness, disability, or the need for extended care.
4. Financial planning: Policy riders can help clients mitigate risks associated with disability, illness, or unexpected events, ensuring they can maintain financial stability and meet financial goals.

Common policy riders

1. Long-term care (LTC): LTC provides coverage for long-term care services, like nursing home care or in-home health services. This rider can help preserve a client's portfolio by covering the high costs of long-term care, offering financial security and peace of mind.
2. Accelerated death benefit: With this rider, policyholders can tap into a portion of the death benefit in the unfortunate event of being diagnosed with a terminal illness. It offers crucial financial assistance during challenging times. However, this decreases the net death benefit accordingly. 
3. Waiver of Premium: True to its name, this rider exempts the insured from premium payments in the event of disability, guaranteeing uninterrupted coverage.
4. Guaranteed insurability: This enables the policyholder to purchase additional coverage at specified dates without undergoing additional medical underwriting, providing flexibility to changing insurance needs.
5. Child term: An additional feature that provides coverage for the insured's children, offering financial protection in the event of a premature death. 
6. Return of premium: Clients can choose from two separate options. One allows the insured to collect a refund of a portion, or all, of the premium paid on certain anniversaries. The second increases the death benefit each year in proportion to the premiums paid into the policy.
7. Disability income: This provides the insured with a regular income stream if they become disabled and unable to work, assuring financial stability and continued support for the policyholder and their family.
8. Spouse term: An enhancement to a life insurance policy that provides coverage for the insured's spouse, offering comprehensive protection under a single policy.
9. Early cash value: This increases the amount of cash value the insured would access in the first few years of the policy. It essentially removes the adverse effect of surrender charges.  
10. Charitable giving: Directs a percentage of the death benefit to a specified charity upon the policyholder's death, offering tax benefits and supporting philanthropic endeavors without impacting the primary beneficiaries' benefits.
11. Accidental death benefit: This provides an additional benefit if the policyholder’s death is the result of an accident. It offers extra financial protection for unforeseen events and supplements the policy's standard death benefit.

Determining which riders are best for your clients

Advisors can choose the best policy riders for their clients through a comprehensive assessment process by discussing the client's financial objectives, concerns, and risk tolerance.

By considering factors like income replacement, debt repayment, and legacy goals, advisors can tailor the selection of riders to address the client's specific needs and priorities. 

Advisors also conduct a cost-benefit analysis to ensure the additional coverage aligns with the client's budget and provides sufficient value. Regular reviews allow advisors to adjust the selection of riders as needed to accommodate changes in the client's circumstances and financial goals, ensuring comprehensive protection and peace of mind tailored to their needs.

Adding riders to policies

Adding riders to existing active policies may be limited, as carriers might require additional underwriting or may not permit certain modifications. However, clients can easily add riders based on their needs and preferences during application. While some riders may incur additional costs, others may be included at no extra charge. Advisors should discuss the implications of adding riders, including potential impacts on premiums and cash value accumulation, with their clients.

Next steps

Policy riders play a crucial role in enhancing the value and flexibility of life insurance coverage. Advisors should educate clients about the various riders available and help them select options that align with their needs and goals. 

A tech-enabled brokerage, like Modern Life, can simplify the life insurance process for clients and advisors. Here’s how:

• Seamless client onboarding: Modern Life's shareable fact finder link gathers more client information and HIPAA consent upfront, streamlining the underwriting process and helping clients feel more comfortable sharing sensitive information.
• Status and requirement tracking: Modern Life's dashboard makes it easy for teams to work together with one central source of information. Advisors can access a comprehensive overview of pending and completed requirements for each case, along with notes from the case management team. Accessible from any device, the dashboard keeps everyone informed and facilitates client discussions. Weekly round-up emails to team stakeholders also help to ensure proactive case management.
• Product choice: We partner with more than 30 of the nation’s top carriers to provide a variety of product choices, from permanent and term to long-term care and disability. Advisors can compare quotes from multiple carriers to find the best options that align with client preferences.
• Document management: Say goodbye to digging through emails. We offer a single point of reference for document management to minimize paperwork-related mishaps, enhance organization, and promote efficient case management. 
• Responsive brokerage support: Modern Life provides dedicated support for complex cases, ensuring advisors receive the assistance they need. This support results in 41% faster approval times and cost savings for clients. 

To learn more about how we can elevate your firm’s life insurance business, fill out the form below.