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Customize Your IUL with Important Optional Riders

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Insurance Quotes 2 Day Team

Written By Doug Mitchell

Doug Mitchell, CLU holds a BA degree in Finance from Auburn University, a Chartered Life Underwriter (CLU) designation from The American College in Bryn Mahr, PA and Top of the Table member of the Million Dollar Round Table (MDRT). Doug has spent close to 30 years in the insurance and financial planning industry and has held licenses to sell securities, long-term care insurance, health.  Doug is also a financial blogger addressing the topics of life insurance, annuities and retirement income planning.

Holly Mitchell  &

Holly Mitchell’s background in life insurance insurance goes back to 1985 when she worked for her father who was a New York Life agent. Holly has a marketing degree from Auburn University and has had a life insurance license since 2008. In addition to advising life insurance for customers all around the country, Holly is our website fact checker.

Rob Pinner   &

Rob Pinner is the founder and CEO of Pinner Financial Services servicing all 50 states. Rob started his insurance career in 2002.

Louis LaBash

Results-driven and innovative life insurance professional with 30 plus years of life insurance industry sales and marketing experience. Recognized as a pioneer in the field, leveraging phone and internet channels to exceed personal sales of over $100 million during the first decade of the 21st century. Creator of a highly effective intuitive IUL life insurance sales software that facilitated the sale of millions of dollars of indexed universal policies by numerous life insurance agents. Proven track record as a Managing General Agent (MGA), Life Agent, IUL Life Insurance Sales Software developer, and leading-edge creator of insurance marketing tools, educational content, and delivery systems.

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Indexed Universal Life Insurance (IUL) is gaining in popularity year after year because this unique life insurance product provides an affordable death benefit that is combined with a cash value accumulation.

For individuals who prefer to own financial instruments that are not constrained by regulatory rules and understand the importance of building an asset that will deliver a tax-exempt income stream, an IUL supremely fits the bill.

Assuming that you, the reader, already understand how an IUL can deliver considerable wealth in your retirement planning, there are valuable riders that should be seriously considered at the time of purchase.

A simple analogy would be comparing your IUL with a shiny new vehicle that has all the bells and whistles to customize your sweet ride.

Insurance riders provide living benefits that are specially designed to protect your beneficiary when you die and to protect yourself while you’re alive.

Does Every Insurer Offer Indexed Universal Life Riders?

In almost every situation, life insurance applicants have the ability to add optional insurance riders when purchasing coverage. Certainly, the riders available to you will vary by policy type and the insurance company offering the product you’re planning to purchase.

Yes, almost every rider you add to your policy will increase your policy’s premium, but the increase is typically well worth it when you consider all of the things that can go wrong during your life other than your untimely demise.

There are many riders to choose from but in this article, we’ll drill down into the most popular riders that can be added to Indexed Universal Life insurance and not only describe each one, but also discuss who they would be best suited for.

The riders are divided into three categories: 

  • Living Benefits
  • Broaden your coverage
  • Policy Protection

Riders that Provide Living Benefits

Rider Benefit Who Should Consider
Accelerated Death Benefit This rider provides for the insurer to advance a portion of the death benefit to the insured if the insured is diagnosed with a terminal, chronic, or critical illness. When the insured dies, the beneficiary will receive the balance of the death benefit. Although most insureds have comprehensive health insurance coverage, there are many costs associated with terminal, chronic, and critical illnesses that are not covered under most health insurance plans or Medicare.
Long-Term Care Rider The long-term care rider provides for the insurer to pay a monthly benefit toward the insured’s cost for long-term care services. Although there are stand-alone long-term care policies available, many applicants cannot get past the underwriting process and the policies are very expensive. According to the Family Caregiver Alliance (FCA), 8,357,100 people receive care from the 5 main long-term care services. Although the majority of long-term care patients are seniors, every person that has no long-term care financial support should consider this rider.
Disability Income Rider By purchasing the disability income rider, the insured will be paid a monthly benefit if he or she should become temporarily or permanently disabled and unable to work. Many of these riders also include a ”partial disability” benefit if the disabled insured can work but still suffers a loss of income. Applicants who do not have short-term or long-term disability coverage should consider this rider as a less expensive method for obtaining personal disability coverage.

Riders vary by company so always check the terms and conditions associated with the rider(s) you are considering.

Riders that Broaden the Coverage of Your IUL

Rider Benefit Who Should Consider
Guaranteed Insurability Rider The GIR allows the named insured to buy additional insurance coverage at a pre-established interval without having to prove insurability. Life happens, and in many cases, it involves financial decisions. This rider will allow the insured to increase his or her death benefit without medical underwriting. 
Accidental Death Benefit The ADB rider provides for the insurer to increase the death benefit by a predetermined amount if the insured dies as a result of an accident. Many applicants select the ADB rider because the cost of insurance is very low and can be easily added to the policy.
Child Term Rider The Child Term Rider (CTR) allows the insured to purchase inexpensive term insurance on the lives of all dependent children in the household. Additionally, many insurers will allow the insured child to convert the term insurance coverage to permanent insurance when they age out of the policy coverage. Any applicant who has one or more children or is planning to have children should consider this rider. Regretfully, children are at risk of dying and the cost of a funeral in the 21st century can be substantial. This inexpensive rider will make certain if the worst happens, you’ll not have to pay for a funeral out-of-pocket.
Spouse Insurance Rider This rider is an additional feature that allows the insured to add term insurance on the spouse. By purchasing the term insurance on a spouse through a rider, the cost of insurance is much lower than a separate term policy. Married applicants should consider this rider if available because of the lower cost of life insurance compared to a traditional term policy.


Rider Benefit Who Should Consider
Overloan Protection Rider The Overloan Protection Rider can be a critical addition to your IUL. This allows the insured to supplement his or her retirement income by taking the maximum amount of policy loans and keeping the policy’s death benefit secure for your beneficiary(s). Even when the chosen equity indexes are underperforming, this rider will guarantee that your IUL will not lapse in the event of “overloans.” Although there are many terms and conditions associated with the OPR, this rider should be considered by an insured who is self-managing a LIRP funded with an IUL.

Riders vary by company so always check the terms and conditions associated with the rider(s) you are considering.

In Conclusion

Certainly, there’s a lot to consider when purchasing an IUL to become one of the buckets in your retirement plan. Most of the riders listed are related to life events that will likely happen to every applicant, but the issue is you’ll need to plan for these events at the time of purchase.

Yes, rates and rate of wealth accumulation are an important part of the shopping process, but the applicant who is well-informed about optional riders will be in a better position when these life events take place. Quite frankly, they’re bound to happen to almost everyone.

author avatar
Doug Mitchell, CLU Independant Advisor
Doug Mitchell, CLU holds a BA degree in Finance from Auburn University as well as having obtained a Chartered Life Underwriter (CLU) designation from The American College in Bryn Mahr, PA. Doug has spent almost 30 years in the life insurance industry and has also held licenses to sell securities, long-term care insurance and home and auto insurance. Doug is a Top of the Table Million Dollar Round Table member (MDRT).  MDRT is a global, independent association of the world's leading life insurance advisors.  For two years, Doug served as President of the Auburn Opelika Association of Financial Advisors and has been a member of the Million Dollar Round Table. He obtained Life Millionaire status at Horace Mann Insurance Company and was awarded the Life Agent of the Year Award. Later in his career with New York Life he was an Executive Council Member. Doug currently serves as President of Ogletree Financial, a managing general agency serving life insurance agents and clients in all parts of the United States. Today, Doug’s main focus is servicing 1000s of policyholders and growing the agency through the reach of