Most Frequently Overlooked Life Insurance Features and Benefits

Ashley ChorpenningWritten by Ashley Chorpenning,

Purchasing a life insurance policy is a big financial decision.

If you choose to spend hundreds of dollars each month on premium payments, you want to ensure you’re getting the most out of your coverage.

To help you maximize your hard-earned money, we've created this list of the most overloocked life insurance features and benefits. 

This insider's guide will tell you everything you need to know about selecting the right policy for your current and future coverage needs. 

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Waiver of Premium Rider

In the chance you were to become seriously injured, ill, or disabled, a waiver of premium rider eliminates your monthly premium for a specific period of time. Other conditions may apply, including reaching a certain age or the condition of your health.

Waiver of premium riders are only available upon purchase of the life insurance policy as a supplemental benefit. Insurance companies usually add a fee to the premium or charge an upfront fee for including the rider provision. Costs may vary depending on the policyholder and the specific insurance company issuing the life insurance policy.

Waiver of premium riders may not be applicable for certain states or those policyholders who currently have a pre-existing health condition. There may also be a waiting period once you purchase your policy before you can claim disability.

Guaranteed Purchase Option

A guaranteed purchase option rider, or GPO, allows the insured to purchase additional coverage at a later date or life event. The new policy value will be less or equal to the original policy the GPO combines with. As an added bonus, the new policy is not dependent on the current health of the policyholder.

For example, let’s say your first born receives a diagnosis of autism at age 2 and then epilepsy at age 5. If you wanted to insure your toddler, many companies would deny your application. With a GPO rider, you can cover your child without a health evaluation.

Long-Term Care Rider

According to the U.S. Department of Health and Human Services, long-term care can cost upwards of $7,698 per month for care in a private nursing home facility. If you haven’t planned for this extra expense, you can add on a long-term care rider to your policy to help cover some of the cost.

A long-term care rider will access money from your death benefit and use it toward the cost of long-term care. Using this rider may decrease your cash value and death benefit, but it supplements the cost of an expensive nursing home or in-home care.

Many insurers may provide stand-alone long-term care coverage, but they can be pricey and difficult to qualify for. Adding a long-term care rider to your life insurance policy can be an alternative budget-friendly option.

Accelerated Death Benefit

An accelerated death benefit allows the policyholder to take cash from their death benefit in the circumstance of a terminal illness diagnosis. Policyholders who select this option commonly have less than one year to live and use their funds to pay for treatment or other expenses.

Some policies may allow you to access this feature even if it’s not stated in the initial contract. Be sure to check with your provider to verify this as an option for your future needs.

Spouse or Child Term Riders

Some life insurance policies allow you to add an additional rider to your policy for your spouse or dependent as long as they are under 26. This rider gives coverage to both of you instead of only covering one policyholder. Purchasing an extra life insurance policy for your loved one may be more costly than adding a rider to your current life insurance policy.

This rider has become less and less popular due to insurance companies pushing the purchase of individual policies. However, if you think this rider would benefit your future needs, check with your insurer before purchasing an additional policy.

Cash Value Plans

Cash value or cash accumulation is the investment component attached to many whole and universal life policies. The cash value remains in a separate account that earns interest, separate from your face amount or death benefit, which is then distributed to your heirs upon your death. You can borrow against your cash value, and contribute to it each month to grow your funds.

Keep in mind, policies with this benefit may cost 3 to 4 times more than comparable guaranteed universal life or term life policy. Also, like with most investments, there is market risk involved in using life insurance as an investment.

The risk is that your cash accumulation account might not perform well, in which case the cost of insurance and mortality risk charges will deplete your cash value down to zero.

For more information about cash accumulation policies check out this article.

Cash Withdrawal

Many universal and whole life insurance policies allow you to borrow against your cash value. Essentially, you will use your cash value as collateral in case you default on the loan.

You can use the cash value of your policy to pay for your premiums in case you’re faced with financial distress. It’s important to note you will have to pay the entire cash value amount back in order for your beneficiaries to receive your entire death benefit when you pass. If you don’t pay back the cash amount, the death benefit will lessen.

Survivor Support Services

Losing a loved one is a stressful time. Accessing your life insurance benefits and understanding the claim process can be a challenge when you’re emotionally drained. Therefore, some insurance companies provide resources and support to help you in your time of need.

For example, Prudential offers help with funeral planning, organizing documents, financial and legal guidance, and emotional support for your family. Each insurance company may provide different support services. If this is important to you when purchasing a policy, make sure to request an outline of services prior to selecting an insurer.

Employee Assistance Programs

In addition to supporting your loved ones in the circumstance of your passing, some insurers provide employee assistance programs. The purpose of these programs is to provide counseling and support services for personal and professional issues.

Some of these resources can include career counseling, financial and legal resources, and face-to-face visits with a financial planner. Specific insurance companies have different levels of support they provide depending on the insurance policy you select. These resources are generally free to the policyholder.

The Bottom Line

Take a close look at your insurance policy to ensure you don’t miss some of these life insurance features and benefits. Understanding your policy’s features is vital to maximizing your life insurance coverage.

Working with a life insurance expert like JRC Insurance Group can help you identify the features you need for you insurance policy. JRC Insurance Group is an independent life insurance agency, and a top seller of term life insurance.

Our staff possesses a collective experience of over 100 years in the life insurance industry. We work with 63 top-rated life insurance companies, which offer a wide variety of plans for a wide variety of purposes, both individual and commercial.

Most importantly, our services as completely free, and there is no cost to apply for coverage. Give us a call toll-free today at 855-247-9555, or you can request a free quote online to compare rates and options from dozens of insurance companies in less than a minute.

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Ashley Chorpenning

Ashley Chorpenning

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