Wanna know about Life insurance rider types and differences
by Guest » Mon Dec 28, 2009 07:09 am
Someone please tell me about the different types of life insurance riders. Are all LI riders alike?
Total Comments: 42
Posted: Mon Jul 12, 2010 08:19 pm Post Subject:
Is it feasable to have a policy for the main insured and add the spouse as a rider? This used to save the insured $ instead of drawing up 2policies which put $ in the agents pocket. Is this still the case or has this changed? Also, It used to be true that the main insured was the main bread winner, the spouse and children would be riders on same policy based on need. Owner of the policy was not the main insured, it was the spouse or sig. other, so in the event of death they wouldn't be taxed on death benefit. Is this still all true or has it changed? If it has changed what is the case presently?
Serious question: What do you do when they get divorced?
Answer: Have fun with that one.
Posted: Tue Jul 13, 2010 02:36 pm Post Subject:
Is it feasable to have a policy for the main insured and add the spouse as a rider?
This is a common practice with many insurance companies. The spouse/additional insured rider is almost always a term rider, which could extend to age 65 or 70, sometimes longer. Obviously, with a term rider attached to a cash value policy of some kind, the rider does not positively affect the cash value.
[[ If the client is interested in building cash value in a spouse's coverage, then a separate cash value policy for the spouse is the only way to accomplish that. ]]
Serious question: What do you do when they get divorced?
Most such riders come with a conversion privilege to an individual cash value policy up to the same face amount as the rider coverage without proof of insurability, but at "attained age" (conversion at an earlier age means a lower premium). This privilege can be invoked in the case of the death of or divorce from the primary insured, or at any other time within the contractual limitations of the rider.
As with all life insurance outside of viatical/life settlements (or other "transfer for value" issues), regardless of who the owner of the underlying policy is, the beneficiary receives the death benefit free of income tax liability.
Posted: Mon Jul 12, 2010 08:19 pm Post Subject:
Is it feasable to have a policy for the main insured and add the spouse as a rider? This used to save the insured $ instead of drawing up 2policies which put $ in the agents pocket. Is this still the case or has this changed? Also, It used to be true that the main insured was the main bread winner, the spouse and children would be riders on same policy based on need. Owner of the policy was not the main insured, it was the spouse or sig. other, so in the event of death they wouldn't be taxed on death benefit. Is this still all true or has it changed? If it has changed what is the case presently?
Serious question: What do you do when they get divorced?
Answer: Have fun with that one.
Posted: Tue Jul 13, 2010 02:36 pm Post Subject:
Is it feasable to have a policy for the main insured and add the spouse as a rider?
This is a common practice with many insurance companies. The spouse/additional insured rider is almost always a term rider, which could extend to age 65 or 70, sometimes longer. Obviously, with a term rider attached to a cash value policy of some kind, the rider does not positively affect the cash value.
[[ If the client is interested in building cash value in a spouse's coverage, then a separate cash value policy for the spouse is the only way to accomplish that. ]]
Serious question: What do you do when they get divorced?
Most such riders come with a conversion privilege to an individual cash value policy up to the same face amount as the rider coverage without proof of insurability, but at "attained age" (conversion at an earlier age means a lower premium). This privilege can be invoked in the case of the death of or divorce from the primary insured, or at any other time within the contractual limitations of the rider.
As with all life insurance outside of viatical/life settlements (or other "transfer for value" issues), regardless of who the owner of the underlying policy is, the beneficiary receives the death benefit free of income tax liability.
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