Transfer of Insured Rider

Understanding the Transfer of Insured Rider

A Transfer of Insured Rider is a specific provision that can be attached to a life insurance policy. It allows you to transfer your insurance coverage to another person subject to that person’s health and financial stability. This can be particularly advantageous if you find yourself changing your coverage needs or needing to adjust policy ownership for specific reasons, such as a change in spouse income roles. Another situation would be if the life insurance was used to protect the family business, and now the ownership of said business is moving from parent to child, so the life insurance ownership would need to change from parent to child as well.


How Much Coverage Does It Provide?

The coverage amount from a Transfer of Insured Rider typically reflects the original amount of the life insurance policy itself. This means that the benefits you chose when you selected the policy are what will be transferred. Common policy amounts can range from $100,000 to over $1 million, depending on your individual policy and the insurer. The specifics will vary based on your provider and the terms you agree upon, but rest assured that your chosen amount will work as the basis for the transferred coverage.

What Can a Transfer of Insured Rider Help With?

Having a Transfer of Insured Rider in place provides several key benefits, especially for parents with family businesses:

1. Flexibility: Life can change quickly with the arrival of a child. If a partner or loved one needs to take over the policy because a change in income earning roles, the Transfer of Insured Rider allows for that transition without needing to apply for a new policy. This means less stress during a difficult time, allowing your family to focus on healing and managing other important affairs.

2. Continuous Coverage: If the current policy you have is specifically tailored to your needs, this rider will help you keep the same policy, even if ownership needs to change.

How to Add a Transfer of Insured Rider to Your Policy

To secure a Transfer of Insured Rider, the first step is to consult with your insurance agent. They can guide you through the process of adding the rider to your existing policy or help you identify it when shopping for a new one. Make sure to discuss your specific family situation and coverage needs.

As you navigate this process, remember to ask questions and ensure you understand how the rider functions, including any conditions or stipulations related to the transfer. Understanding these details will enable you to make informed decisions.

Conclusion

This rider provides flexibility, continuous coverage, and peace of mind, ensuring your family remains protected during life’s uncertainties. This rider benefits mostly people that have a business or use their life insurance policy to cover the business.