When you begin the process of estate and financial planning, there are many decisions you need to make. Even the most basic decisions, like the type of life insurance coverage you will buy and what family members to cover, can be overwhelming. The costs associated with each decision add up and may force you to sacrifice coverage for affordability. If you know the options available, you can simplify your planning and get all the benefits you need without exceeding your budget.
Often, the first step in financial planning involves the purchase of two life insurance policies—one covering you and another for your spouse. Depending on your age, the amount of insurance you need, and your health history, you may be concerned about the combined cost of the premiums for the two policies. One life insurance policy with a spousal rider may be inexpensive.
Riders are added benefits that you can attach to your life insurance policy. They can also make a family policy much more accessible to afford. A spousal rider will pay a benefit on the death of your spouse as long as it occurs before or at the same time as your own. The premium for the rider could be less than a comparable individual policy for your spouse.
With a spousal rider, the coverage of the named spouse ends after the death of the primary insured. This means that the surviving spouse may be forced to get their insurance policy at an older age and possibly in worse health than at the time of the original purchase.
You may also consider a final expense policy for each of your children. Instead of buying separate policies for the children, each with its premium, why not buy one with riders to cover the rest? Add a child rider to protect your children and expand your single policy’s coverage umbrella.
Children can be covered on a child rider until they reach the age of 18. There may be an additional period they can be covered if they are full-time college students. As with the spousal rider, the rider will only pay a benefit if the child dies before or simultaneously with the primary insured.
Suppose you are concerned about an accidental death causing undue stress to your family and creating additional unexpected costs. In that case, you might consider adding an accidental death benefit (AD&D) rider to your policy. The AD&D rider provides an extra death benefit should your death occur due to an accident. Be sure to read the terms of the rider carefully to understand what the insurance company considers an accidental death. Illnesses, biological events, and other causes of death may not be defined as accidents by the insurance company and will not be payable.
Life insurance can be customized to suit the needs of any person. With the use of riders, you can end up with an affordable policy that covers a wide range of events and requires just one premium payment each year.