What is a rider in the context of life insurance?

A rider in the context of life insurance is an attachment that modifies the conditions or coverage of the original insurance policy. These modifications can enhance the policy by adding benefits or altering the terms, addressing specific needs of the policyholder. For example, a common rider might provide for additional coverage in case of accidental death or allow the policy to accumulate cash value.

Including a rider allows policyholders flexibility to customize their insurance to better suit their individual circumstances without having to purchase a separate policy. This feature is particularly advantageous for individuals seeking to address specific risks or changes in their life situations while maintaining a primary insurance policy.

The other options do not represent the function of a rider accurately. An increase in policy premiums refers to a change in the cost of the policy itself, not an addition that modifies its terms. A type of beneficiary designation pertains to naming individuals who will receive benefits from the policy, which is not the same as a rider. Lastly, a standalone insurance contract refers to an independent policy rather than an enhancement or modification of an existing one.