5.2 Death Benefit and Insured Riders

Death-benefit riders add to the amount payable at death, extend coverage to additional insureds, or protect the insured's future ability to buy coverage. They are popular because they bundle several needs into a single contract at lower cost and with less paperwork than buying separate policies. As with living benefit riders, the exam focuses on the trigger, any time limits or exclusions, and whose life is covered.

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Guaranteed Insurability Rider (GIR)

The guaranteed insurability rider (also called a guaranteed purchase option) gives the insured the right to purchase additional coverage at specified future dates, called option dates, without proving insurability. This protects an insured whose health may decline later: even a person who becomes uninsurable can still exercise each option and add coverage.

Typical Option Dates

Each option lets the owner buy a stated amount (for example, $25,000) at standard rates for the attained age, regardless of current health. Options are usually "use it or lose it": an option not exercised within a short window (commonly 60 to 90 days around the option date) expires, although a life-event option may be substituted for the next scheduled date.

Exam Tip: The GIR locks in insurability, not price. Premiums for new coverage are based on the insured's attained age at purchase, not the original issue age. The rider guarantees you can buy more; it does not freeze the rate.

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Accidental Death Benefit (Double Indemnity)

The accidental death benefit (ADB) rider, sometimes called double indemnity, pays an additional amount, commonly equal to the face, that doubles the payout if death results from an accident. Because accidental deaths are statistically rare among insured adults, this rider is inexpensive, but it pays only for a narrow cause of death.

Conditions and Exclusions

The 90-day rule is heavily tested: if the insured is injured in an accident but dies from those injuries more than 90 days later, the ADB amount is not paid, although the base face amount still is. The rider also commonly expires at a stated age such as 65 or 70.

Worked Example

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Term Riders (Other Insured / Spouse / Children)

Term riders add level term coverage to a permanent base policy, letting one contract protect a whole family:

• Other-insured / spouse rider — term coverage on a spouse or business partner whose death would also create a financial loss
• Children's term rider — covers all current and future children, including newborns automatically after a short waiting period, for one flat premium, and is usually convertible to permanent coverage at the child's age of majority with no evidence of insurability
• Family rider — combines coverage on the spouse and children in a single rider, sized in "units"

A major selling point of the children's term rider is the conversion privilege: when the child reaches the stated age, the term coverage can be converted to a permanent policy, often at several times the original amount, without a medical exam. This guarantees the child lifelong insurability even if a health problem develops in childhood.

When an other-insured or spouse rider is attached, remember the insurable interest rule still applies at the time of application. The policyowner must have a legitimate financial or familial interest in the additional insured's life. A spouse rider also typically allows the spouse to convert to a separate permanent policy upon divorce or the death of the base insured, preventing a loss of coverage when family circumstances change.

Cost-of-Living (COLA) Rider

The cost-of-living adjustment (COLA) rider periodically increases the death benefit in line with an inflation index, usually without requiring new evidence of insurability, so the policy's real value is not eroded over time. The added coverage is purchased as small increments of term, and each increase raises the premium accordingly.

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Return of Premium Rider

The return of premium (ROP) rider pays the beneficiary the face amount plus a refund of the premiums paid if the insured dies during the term. Because the refundable premium total grows each year, the rider is funded with increasing term insurance.

Exam Trap: A return of premium rider pays the refund at death (funded by increasing term). A return of premium term policy instead refunds premiums if the insured survives the entire term. Read the question carefully to see whether death or survival triggers the refund.