What are 'riders' in an insurance policy?

Riders in an insurance policy refer to additional benefits or coverage options that can be incorporated into a base policy. These riders allow policyholders to customize their insurance coverage to better suit their individual needs and circumstances. For example, a life insurance policy might include riders that provide for an accelerated death benefit if the insured is diagnosed with a terminal illness, or a waiver of premium rider, which allows the policyholder to stop paying premiums if they become disabled.

The flexibility offered by riders is significant because it allows for both enhanced protection and tailored coverage, catering to the specific risk and financial situations of the insured. This customization is important as it can make insurance coverage more comprehensive, aligning with the policyholder's unique life events and financial goals.

Without the inclusion of riders, an insurance policy would often only address standard coverage and benefits, potentially failing to meet the comprehensive needs of the insured, hence the value of adding these options. Riders are distinct from other policy components such as exclusions or claims, which serve different purposes within the policy framework.