How Do Living and Death Benefit Riders Work?

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Contributor, Benzinga
August 3, 2021

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There are a variety of living and death benefit riders that you can easily add onto your insurance’s annuity contract for a price. Riders allow you to customize your life insurance policy coverage so that it’s better suited to your unique needs. Some may be necessary for your situation, and some can just be helpful to ensure that things work out for your beneficiaries after you die. 

What Are Living and Death Benefits Riders?

Living and death benefit riders are extra parts of a policy that you can add onto a life insurance policy. Living and death benefit riders are entirely optional, and you don’t need to purchase any riders to enjoy the full benefits of your life insurance policy. However, many men and women who invest in a life insurance contract find that these riders can provide them with an enhanced level of peace-of-mind. 

Living benefit riders are used to guarantee a payout before the insured dies. Death benefit riders offer protection to beneficiaries after death, which ensures there is no decline in benefit value resulting from market volatility. Most living and death benefit riders fluctuate in pricing depending on some of the most common factors that influence what you’ll pay for your insurance contract, as well as market movements.

The amount you’ll pay for your unique riders will vary depending on the type of rider that you’re adding to your policy. 

How Do Living and Death Benefits Riders Work?

Living and death benefit riders work the same way the insurance policy works. Once the event specified in the policy occurs (for example, the insured’s death), the riders are put into action along with the life insurance policy. Different types of riders work differently, so it’s important to understand these distinctions before you purchase a policy. 

For example, say at the age of 60 you purchased a variable life insurance annuity contract worth $100,000. This policy grew for years, until it was largely wiped out because of market volatility 15 years later. By the time you die at age 80, your contract is worth only $75,000. If you had invested in a basic death benefit rider when you bought the contract, your beneficiaries would still receive the full original value of $100,000. 

Types of Death Benefit Riders

A number of death benefit riders are available, each having their own specific circumstances for when they can be used and differing in cost. Each rider is placed into 1 of 2 categories: basic death benefit rider and enhanced death benefit rider. The following are a few of the most common death benefit riders available: 

Accidental Death Rider

This rider requires a payout in addition to the death benefit in the event that an accident is the cause of the insured’s death. The additional benefit upon accidental death is usually the same amount as the original policy. This could mean that the benefit almost doubles. If the death is because of an accidental bodily injury, the beneficiaries get double the amount of the original policy. This is a good rider for those who are the sole provider within the family and who work in a high-risk industry such as logging or fishing. 

Family Income Benefit Rider

The family income benefit rider provides income to surviving family members in the case of the insured’s death. This benefit essentially mimics the insured’s income as if they were still alive. It can provide major financial stability to families who have lost their main financial provider, so you may want to consider adding this rider to your insurance policy if you’re the primary breadwinner in your household.   

Accelerated Death Benefit Rider

An accelerated death benefit rider allows the insured to use the death benefits from the policy in the event that they are diagnosed with a terminal illness. Insurers usually provide an advance of a certain amount of the death benefit to the insured.

However, each insurance company has its own list of illnesses that it considers to be terminal so this rider is not the same across the board. Be sure to review your policy’s list of illnesses that warrant a payout before you invest in an accelerated death benefit rider.   

Cost of Riders

Some riders come for free, but others come at a cost. The cost of a rider reduces the value of the policy each year because you must pay additional funds into your premium to maintain the coverage that comes with most riders. The cost of riders depends on your policy, your insurance company and your location.

Riders such as the accelerated death benefit usually do not increase your premium because the circumstances surrounding your death won’t increase the amount of money that the insurance company must pay out in total. However, the family income benefit rider is an example of a rider that will increase your premium because the stipulations in this rider dictate that the insurance company must offer additional income to your beneficiaries beyond the value of your contract.    

How to Choose the Best Policy

Choosing the best insurance policy is dependent on a multitude of factors of your life. Riders enable you to choose a policy that fits you, your unique needs and the needs of your family by customizing your policy to pay out when it will be most beneficial to you and the people you love. However, not everyone needs, nor can afford, to add on every rider that is offered — and that’s fine. What’s important is knowing your family’s health history and to carefully consider which riders will provide you with the highest level of protection.

When choosing a life insurance policy, ask yourself what you need to get out of the policy in order to justify the cost. Would your family survive financially without your income? Are you paying for your child’s or grandchild’s college education? How much debt do you have? Do you still have loans, medical bills or a mortgage to pay off? All of these are questions to consider when choosing a life insurance policy. 

The final aspect to consider when choosing a policy is the cost you’ll pay per month. You’ll need to take your age, health and the amount of the death benefit you are considering into account when you balance monthly premium payments with benefits. Once you’ve considered all these aspects, ask yourself what you can afford versus what your family and beneficiaries will need after you die. Once you’ve determined what you can afford to pay in premiums every year, you’ll have narrowed down your options, and you can begin comparing coverage choices.   

Risky Illness Insurance Riders

The risky illness benefit rider, sometimes referred to as the “major surgical assistant rider” or the “dreaded disease rider,” offers additional coverage in the event that you contract a critical illness. Critical illnesses that are covered vary from insurance company to insurance company. 

Illnesses such as cancer, a heart attack, kidney failure and situations like organ transplants are generally considered critical illnesses that an insurance policy will cover with this specific rider. The sum determined upon adding the rider to the policy will be paid out upon diagnosis. You can then use this money from the policy to cover critical illness and end-of-life care, which helps your family avoid interest charges that come along with bills that your family needs your life insurance benefit to pay.

If you have a family history of any of the long-term illnesses listed above, you might want to be sure that your life insurance policy includes coverage for these. 

Best Insurance Companies for Living and Death Benefit Riders

If you’re considering investing in a life insurance policy, know that the company you choose to provide your policy can be just as important of a decision as your death benefit. Consider starting your search with a few of Benzinga’s favorite insurance providers below. 

  • securely through Wysh Life Insurance's website
    securely through Wysh Life Insurance's website
    Best For:
    Those Under 50 Years Old
    Read Review
  • securely through Ladder Life Insurance's website
    securely through Ladder Life Insurance's website
    Best For:
    Adjustable coverage
    Read Review

    Ladder Insurance Services, LLC (Cal. license # 0K22568; Ark. license # 3000140372) offers term life insurance policies: (i) in New York, on behalf of Allianz Life Insurance Company of New York, New York, NY (policy form # MN-26); and (ii) in all other states and the District of Columbia on behalf of Allianz Life Insurance Company of North America, Minneapolis, MN (policy form # ICC20P-AZ100 and # P-AZ100). Only Allianz Life Insurance Company of New York is authorized to issue life insurance in the state of New York. Insurance policy prices, coverages, features, terms, benefits, exclusions, limitations and available discounts vary among these insurers and are subject to qualifications. Each insurer is solely responsible for any claims and has financial responsibility for its own products.

  • securely through Haven Life Insurance's website
    securely through Haven Life Insurance's website
    Best For:
    Under Age 64
    Read Review

    Haven Term is a Term Life Insurance Policy (ICC21 Haven Term in certain states, including NC) issued by C.M. Life Insurance Company (C.M. Life), Enfield, CT 06082. In New York (DTC-NY) and California (DTC-CA), it is issued by Massachusetts Mutual Life Insurance Company (MassMutual), Springfield, MA 01111-0001.

  • securely through Fabric Life Insurance's website
    securely through Fabric Life Insurance's website
    Best For:
    Young families
    Read Review
  • securely through Bestow Life Insurance's website
    securely through Bestow Life Insurance's website
    Best For:
    Term life insurance
    Read Review

    *excludes New York

  • securely through Sproutt Life's website
    securely through Sproutt Life's website
    Best For:
    People with healthy lifestyles
    Read Review

Should You Add Riders to Your Insurance Policy?

Insurers offer a plethora of life insurance policies to choose from, and with living and death benefit riders available, you can make your policy fit you and your life. It’s important to know exactly what your life insurance policy offers and what the different protections each rider offers — as well as what they don’t offer.

As is the case with every type of insurance policy, coverage can vary dramatically between insurance providers. Be sure you completely understand what each rider on your policy covers before you sign on the dotted line. 

Frequently Asked Questions


Benzinga crafted a specific methodology to rank life insurance. To see a comprehensive breakdown of our methodology, please visit our Life Insurance Methodology page.