What Does Living and Death Benefit Riders Mean?
Living and death benefit riders are add-ons to standard insurance policies or annuity contracts that provide additional benefits.
Typically, to take advantage of these riders, the policyholder will have to pay an additional fee over and above the standard premium they pay for the primary coverage or annuity.
These riders are commonly added to life insurance policies.
Insuranceopedia Explains Living and Death Benefit Riders
Most policies offer either only living benefits or death benefits.
In the case of annuities, the benefit provided is a living benefit, which is paid to the annuitant during their lifetime and ceases once they die.
Conversely, life insurance policies typically pay nothing to the insured during their lifetime (unless there is some investment vehicle attached to the policy) and only have a death benefit that will be paid to the beneficiaries of the policy after the insured dies.
Living and death benefit riders add provisions to these policies so that they will pay both during the lifetime of the insured and after their death. In effect, these riders add a death benefit to an annuity and a living benefit to a life insurance policy.
These additional benefits are usually only triggered by special circumstances. For instance, an annuity with a death benefit rider might only provide a death benefit to the insured's beneficiary if the insured dies early as the result of an accident. Similarly, a life insurance policy with a living benefit rider may allow the insured to use a portion of their death benefit while they are still alive if they need it to pay for critical medical expenses.