A rider is basically an insurance provision that modifies or adds additional benefits to a basic, binding insurance agreement. Riders are often tailor-made to meet the unique financial needs of an individual policyholder. In general, a rider modifies the original contract by adding conditions or features that the original contract did not contain. However, there are some riders that have no relation to insurance whatsoever. Usually, such riders are implemented by the issuer to protect the balance of their financial commitment and as a result, the balance of the contract may be reduced or the premium may increase.
Examples of commonly included premium rider are claims expense rider, property damage rider, and wrongful death rider. Claims expense rider relieves the insured party from the financial burden of proving the case of a claim. Property damage rider shifts the burden of repairing the property belonging to the insured party from the insured party to the named third party. The named third party is also referred to as the salvager. Wrongful death rider relieves the insured party from the financial burden of paying the costs of funeral and burial services in a wrongful death case. A wrongful death insurance contract is typically considered as a life insurance contract.
Another type of long-term care rider is the cash value insurance rider. The purpose of a cash value insurance rider is to replace the actual amount of cash value insurance provided by the insurer on the insured event. In return, the insured has agreed to pay the cash value insurance company a pre-determined amount each month for as long as the life expectancy of the person insured is more than a particular number of years. It is important to note that this type of rider is only effective if the insured has an income and assets sufficient to support the cost of coverage.
