Term Life Insurance Riders Provide Benefits While You’re Still Alive

While term life benefits are designed to provide benefits for your family after you die, you can benefit from the policy while you’re still alive if you need to. How? Through a rider.

Let’s say you buy a 20-year term life policy with a death benefit of $250,000. Four years into having the policy you’re diagnosed with a terminal illness and given a life expectancy prognosis of two years. A term life rider would allow you to use some of that $250,000 to help pay for medical bills, hospice, or even a trip to a place on your bucket list. You determine how you want to use it, if at all.

There are four types of term life riders you can add to your term life policy that enable you to use the benefit from your policy while you’re still alive.

Types of Term Life Riders

Terminal Illness Rider. Also known as an accelerated death benefit, this rider allows you to use your coverage amount to pay for end-of-life care, debt, or that bucket-list trip. Whatever you need to help make your last days more comfortable.

Critical Illness Rider. This rider allows you to use your death benefit to pay for medical care for a specific illness that isn’t terminal but can shorten your life expectancy, such as a stroke or heart disease. Some carriers call this rider a Long Term Care (LTC) Rider.

Return of Premium Rider. This rider returns the money you paid in premiums once you’ve outlived your policy term. So if you paid $800 a year for 20 years beginning in 2020, you get back $16,000 when the term ends in 2040.

Disability Waiver of Premium. This allows you to stop making premium payments and still keep the policy should you suffer an illness or injury that prevents you from working.

How Term Life Insurance Riders Work

The main thing to know about term life riders is that whatever funds you use from your death benefit will be deducted from the payout going to your loved ones after you pass away.

Also, some carriers require that you have the policy for a specific amount of time before you are allowed to withdraw funds from your death benefit.

Your illness must meet the criteria set by both your insurance carrier and the state you live in. To collect funds on a Chronic Illness rider, you must prove that you are unable to perform two of the six Activities for Daily Living (ADL) such as eating, moving, bathing, dressing, and toileting or continence, and other eligibility requirements.

Life expectancy timelines for terminal illness benefits differ among carriers, too. Most stipulate a life expectancy of two years to collect the benefit. It’s important to know what your carrier’s guidelines are if this is a rider you’re interested in buying.

For the Best Life Insurance for Veterans: Shop EARLY

If you’re military, you probably know all about Servicemember Group Life Insurance, or SGLI. It’s provided coverage for you and your family for your whole career.

However, transitioning out of the military presents new life insurance options worth exploring. You can go with a Veteran Group Life Insurance policy (VGLI); life insurance through a military association such as American Forces Mutual Aid Association (AFMAA); or opt for private life insurance like term life or whole life.

Either way, the best piece of advice any life insurance professional can give a retiring servicemember is this: get quotes early.

You have 120 days from discharge to choose the best life insurance option for you and your family. You can stick with government group insurance or go private with term or permanent life insurance from a commercial life insurance company. But perform your due diligence to determine which will serve you best going forward. And if you’re leaning toward private, keep in mind that it takes between four to six weeks to go through the private life insurance underwriting process.

Online life insurance quotes are easy to get and provide automatic side-by-side comparisons to give you a bird’s-eye view of the marketplace and what you can expect to pay.

Term Life Insurance for Veterans

Term Life insurance is the most affordable commercial life insurance with the most coverage.

It’s set up for a set amount of time with a set amount of coverage at a set premium payment. For example, if you are a healthy 40-year-old male, you can expect to pay around $49 per month for a 30-year $500,000 policy. Your rate does not change.

A similar VGLI policy would cost the same 40-year-old more than $80 per month, renewable every five years with a rate increase. Also, you wouldn’t be able to purchase $500,000 worth of coverage with government life insurance. VGLI coverage caps at $400,000.

Term life is ideal for young families with dependents as it provides a financial safety net when you need it most. And as your family, income and needs grow, you can convert to a permanent policy with cash value without submitting to a medical exam.

Term life insurance does require underwriting, which means a medical exam and labs. So, if you’re retiring with a service-related injury, you probably won’t be able to qualify for term life or will pay much higher premiums than you would through government-sponsored insurance.

Permanent Life Insurance for Veterans

Permanent life insurance is a bit more expensive than term life but generates cash value you can use in a variety of ways—to borrow against or to pay your premiums, for example. Whole life is a type of permanent insurance.

If you decide to go with VGLI when you retire, you can later convert to a private whole life insurance policy. Unfortunately, you cannot do so with term life.

Combination Private and Military Life Insurance

But you can purchase additional term life coverage to supplement a VGLI policy. Experts recommend families obtain coverage for between 10- and 15-times annual income. So the $400,000 coverage cap VGLI offers probably is not enough to protect your family should they lose your income if you pass unexpectedly.

If you’re in reasonably good health, you can purchase a supplemental term life policy for an additional $250,000 for as little as $28 per month.

No matter which life insurance you go with, remember that it’s vital that you start shopping around for the best insurance quotes online as early as possible.

Those 120 days will go fast.

It Isn’t About Who Has the Lowest Life Insurance Quote

As enticing as a low quote on life insurance is, it’s a preview, not the whole story. And life insurance websites that tout the lowest quote will not always guarantee the lowest monthly rate.

Why? Because not everyone who buys a life insurance policy is going to pose the same risk to a carrier providing coverage. Insurance carriers need to keep risks minimal to ensure everyone gets a fair premium.

And how do they do that? With risk classifications. These determine what you’ll pay based on how likely the carrier will have to pay out to your loved ones in the event you pass away.

Life Insurance Risk Classifications

When the life insurance company approves your application, their underwriters assign you a risk classification largely based on your health questionnaire and medical exam.

Classifications are made up of people who share the same characteristics that pose a specific level of risk to the company of paying out a death benefit sooner rather than later. The standard risk classification is the baseline. People in preferred risk classifications have the least risk characteristics and pay the lowest premiums; people in the substandard risk classifications have the highest risk characteristics and pay the highest premiums.

It would be great if the life insurance industry used the same names and requirements for these classifications, but they don’t. However, this may be to your advantage.


Because some carriers have strengths their competitors don’t when it comes to these classifications.

One company may consider a BMI of 25 to be optimal and therefore place it in the risk class with the lowest premium; another may see it as acceptable but put it in a risk class with a higher premium.

One company may classify your annual scuba diving trip in one risk class and premium and another company may place it in a higher risk class with a higher premium.

It all depends on the carrier.

It gets even more complicated when you factor in table ratings.

Life Insurance Table Ratings Chart

Anyone who falls below standard risk is placed in the substandard risk classification and will pay more than the standard risk rate. How much more will depend on their table rating. Substandard risk is where the table ratings kick in.

Underwriters use a life insurance table ratings chart to assess how much those who fall into substandard will pay above the standard rate. Increases generally occur at increments of 25%.

Table rates are identified by numbers or letters. Some carriers use numbers and some use letters. But basically, if you are table rated 1 or A, you will pay 25% more than standard rate, 2 or B 50% more, 3 or C 75% more and 4 or D 100% more and so on.

So let’s look at a table rating in action.

Mary is a 35-year-old woman looking at the average life insurance cost per month for a $1 million life insurance policy. She is looking at a 20-year term policy.

She got a quote of $27 per month from Company A.

Mary admitted she smokes when she got the quote. The medical exam she underwent during underwriting claims she’s in otherwise good health. But her driving record reveals she’s had a couple of driving tickets in the past year. (Yes, those do count.)

Company A places her in a substandard risk classification because of her smoking. So, she’s already going to pay more than a nonsmoker. However, they consider her driving risky behavior and give her a Table 1 rating, which adds 25% to her rate. So now, rather than paying $324 per year, she’s paying $405.

Company B quoted Mary $29 per month but doesn’t consider two tickets to warrant a table rating. She ends up paying $348.

Had she gone with the lowest quote, she would’ve ended up paying more than she would if she’d gone with a higher quote.

A low quote is a great place to start. But they can be misleading. You want to collaborate with a company that gives you the whole story.

Term Life Insurance for Diabetics

Can you get life insurance if you have diabetes? Absolutely. You need it.

Diabetes is no joke. According to the Centers for Disease Control and Prevention, 16% of adults aged 20 and older are living with diagnosed or undiagnosed diabetes. More than 100,000 people died of it in 2020. It’s currently ranked the eighth cause of death.

If you’re diabetic with dependents, it’s important you have life insurance to protect you if you’re no longer there to support them. Term life insurance is perfect because it offers protection during the period of life when you most need it—while you’re in your peak earning years and raising your family.

As a diabetic applying for life insurance, it’s important to know what to expect as you shop for the best term life insurance company for you.

How Life Insurance Companies Evaluate Diabetics

Term life insurance provides coverage for a specific amount of time (term) with a set premium and a set benefit payout. For example, you can buy a 30-year term policy for a $250,000 benefit payout with a $25 per month premium.

All life insurance policies and their premiums will vary based on your age and health. The younger and healthier you are the less you will pay. So, diabetics on average pay more than a person without diabetes. How much more you will pay depends on your diagnosis, diabetic health history, co-conditions, and other variables.

As an applicant with diabetes, your health will naturally be looked at closer than someone without it. Expect to at least be asked additional health questions and most likely undergo a medical exam and lab tests. Some of the things life insurance carriers will want to know about include:

  • Your diagnosis – this is the one area where the axiom about the younger you are the less you’ll pay doesn’t apply. For diabetics, the older you are when you’re diagnosed the less you’ll likely pay. A diagnosis at an early age may suggest more life-threatening disease.
  • Your diabetic health history – They may also request an attending physician statement (APS) to gain insight as to how you’re managing your diabetes.
  • Any diabetes-related co-conditions (heart disease, kidney disease, impaired vision, etc.)
  • Your sugar levels – A1C levels over 7 may affect your premium.
  • Your medications – what you take, how often you take them and for how long you’ve taken them

What to Do If You’re Denied Life Insurance Because of Your Diabetes

Look into guaranteed issue life insurance, which requires no medical exam or health questionnaire and offers guaranteed approval in most cases. The premiums are high, and the coverage maxes out at $25,000, but it provides a cushion for your family to plan next steps in the event your diabetes or related illness takes you away from them.

If your diabetes isn’t severe, try simplified issue life insurance, which has a lower rate and a coverage cap of $50,000. You’ll have to answer some medical questions but again, if your diabetes is less life threatening, it may be worth looking into.

Final expense insurance, also known as burial insurance, is also an option. It will cover outstanding debt and/or funeral expenses so your family won’t be burdened with them.

Like anything else, it pays to shop around. It’s easy as ever to get the best life insurance quotes online for a thorough term life insurance quotes comparison. Then go into the underwriting process confidently, armed with the information you need to get the best deal possible.