5.2 Death Benefit and Insured Riders

Riders that change the death benefit or add insureds

This section covers riders that increase or restructure the death benefit and riders that extend coverage to additional people. These appear heavily on the life-provisions portion of the national exam.

Guaranteed Insurability Rider (GIR)

The guaranteed insurability rider (also guaranteed insurability option) lets the insured purchase additional insurance at specified future dates or events without evidence of insurability — no new medical exam. Tested mechanics:

• Option dates are typically every 3 years between specified ages (e.g., 25 to 40), plus alternate option dates triggered by life events such as marriage or the birth/adoption of a child.
• The new coverage is issued at the insured's attained age at purchase but at standard rates regardless of current health.
• It protects against future insurability risk — the danger that the insured becomes uninsurable.

Accidental Death Benefit (ADB) Rider

The accidental death benefit rider pays an additional amount if death results from an accident, usually within 90 days of the accident. When the additional amount equals the face amount it is called a double indemnity rider; triple indemnity pays three times.

• Excludes deaths from illness, suicide, war, aviation (other than fare-paying passenger), and often hazardous hobbies.
• The benefit pays on top of the base death benefit. Example: a $100,000 policy with a $100,000 double-indemnity ADB rider pays $200,000 for a covered accidental death, but only $100,000 for death by illness.

Return of Premium and Return of Cash Value Riders

A return of premium (ROP) rider pays the beneficiary the face amount plus the total premiums paid if the insured dies during the term. It is structured as increasing term insurance layered on the base policy. A return of cash value rider similarly adds the accumulated cash value to the death benefit.

Cost of Living (COLA) Rider

The cost of living adjustment rider increases the death benefit periodically to keep pace with inflation (often tied to the CPI), usually without evidence of insurability for each increase.

Riders covering additional insureds

The children's term rider (child rider) is a single premium covering all current and future children, and it is typically convertible to a permanent policy at a specified age (often 18–25) without evidence of insurability and at a multiple of the original face.

Term rider vs. paid-up additions

On participating whole life, dividends can buy paid-up additions (PUAs) — small single-premium whole life policies that add to cash value and death benefit. A term rider (the "fifth dividend option") buys one-year term equal to the cash value. Distinguish PUAs (permanent, build cash value) from term riders (temporary, no cash value).

Settlement options vs. riders

Do not confuse riders with settlement options, which control how the death benefit is paid (lump sum, interest only, fixed period, fixed amount, or life income). A rider changes the amount or scope of coverage before a claim; a settlement option changes the payout form after the insured dies. A spouse or children's term rider can also be converted into a permanent settlement for survivors, but the conversion right comes from the rider, not the option.

Worked example: stacking death benefits

Consider a 35-year-old with:

• $250,000 whole life base policy
• $250,000 accidental death (double indemnity) rider
• $10,000 children's term rider
• A return-of-premium rider; $18,000 in premiums paid to date

If the insured dies by natural illness, the beneficiary receives the $250,000 base plus the $18,000 ROP = $268,000 (the ADB rider does not pay). If the insured dies in a covered accident, the beneficiary receives $250,000 base + $250,000 ADB + $18,000 ROP = $518,000. A covered child's death pays the $10,000 children's term benefit regardless of cause.

Exam trap: Accidental death riders pay in addition to the base benefit only for accidental causes, and most exclude suicide and war. Do not add the ADB amount to an illness-related claim.

Riders That Add or Adjust the Death Benefit

Insureds Added to One Policy

A family rider adds term coverage on a spouse and children under one base policy; a children's term rider typically covers all current and future children for one flat premium and is convertible to permanent coverage at the child's maturity without evidence of insurability. A spouse/other-insured term rider layers level term on another adult.

Worked Example: A guaranteed insurability rider lets a 25-year-old buy an additional $50,000 of whole life at ages 28, 31, 34, and 37 — and also at marriage or the birth of a child — at standard rates regardless of health. This is the classic answer for a client who is healthy now but worried about future insurability.

Exam Trap: Accidental death riders pay only for accidental death within the policy's time limit and exclude deaths from illness, war, or aviation in many forms — read the scenario's cause of death carefully.