Part 1
Long-term insurance rider entails an added feature in an insurance policy that deducts money out of the death benefit with the intent of long-term care (Kutty, 2008). It allows an individual to access the best care without footing additional costs. This feature is very beneficial to parties that are struggling with chronic illness and cannot effectively take care of themselves.
Waiver-of-premium rider is a clause in an insurance policy that exempts the policyholder from paying any further premiums should he become disabled or ill. This waiver means a policyholder can continue to benefit from the policy despite not being able to work (Gulati, 2007). This waiver, however, applies only to life insurance policies and requires such an individual to have a waiver of premium and have been established as disabled for a specified period (that is, six months).
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Cost of living rider provides for an increment in the benefits extended to a policyholder due to changes in the cost of living (Kutty, 2008). The increase is arrived at after taking into consideration the Consumer Price Index. This is an ultimate measure by the insurance companies to cushion a client from the effects of high costs of living. A good example is the Cost of Living Adjustment riders that target disabled individuals.
Accelerated death benefit rider is a provision in an insurance policy that allows a policyholder to use part of death benefit as financial aid in an event he or she is diagnosed with a terminal illness (Gulati, 2007). Some examples of accelerated benefit rider policies are critical illness rider, chronic illness rider et cetera.
Double indemnity rider is an additional type of coverage that is purchased alongside a life insurance or accident policy to provide a policyholder with additional benefits (Kutty, 2008). This rider creates larger payments for beneficiaries by expanding areas of coverage.
The guaranteed purchase option is a benefit which can be included in a life insurance policy allowing the insured or policyholder to purchase additional life insurance plans within specified periods in the future without the need for insurability evidence (Gulati, 2007). This rider provides an individual the needed flexibility to accommodate new circumstances that may necessitate certain benefits not offered in the initial policy.
Part 2
Variable life insurance is an insurance policy that has an element of investment in it. Many insurance companies provide a cash value account which is then invested in other existing subaccounts within the policy (Kutty, 2008). A policyholder may choose from the available sub-accounts to ensure that he gets value for his investment or money. The variable life insurance is deemed to be very attractive in that it enjoys favorable tax terms (Leimberg & Doyle, 2007).
Time Life Insurance covers a policyholder for a specific amount of time or a term at a fixed payments’ rate. In case of death while under the cover, a special benefit will be extended to the identified beneficiaries (Leimberg & Doyle, 2007). When the coverage period lapses, the policyholder has an option of either preceding coverage or obtaining additional coverage with different conditions or payments. Another advantage associated with this insurance is its relative cost-effectiveness in comparison to other life insurance policies.
Universal life insurance fuses components of both permanent life insurance and term life insurance. Under this policy, the excess payments on top of the premium payments are invested on behalf of the insured individual (Kutty, 2008). The insured also has the freedom to change the terms of the policy in consideration of his circumstances. The savings interest rates and insurance premiums are variable therefore the policyholders have the option of paying the premiums in part or whole. The beneficiary identified in the policy is usually awarded the accrued death benefit as well as the savings account value (Leimberg & Doyle, 2007).
References
Gulati, N. C. (2007). Principles of insurance management: A special focus on developments in Indian insurance sector - pre and post liberalisation . New Delhi: Excel Books.
Kutty, S. K. (2008). Managing life insurance . New Delhi: Prentice-Hall of India.
Leimberg, S. R., & Doyle, R. J. (2007). Tools & techniques of life insurance planning . Cincinnati, OH: National Underwriter Co.
