What is a rider in life insurance?

A rider in life insurance refers to an additional provision that modifies the terms of the insurance contract. This means that a rider can enhance or change the coverage provided by the primary policy. For example, it might allow for additional benefits like accidental death coverage, long-term care options, or waiver of premium in case of disability.

Riders are important because they enable policyholders to tailor their insurance coverage according to their specific needs, allowing for more flexibility than what a standard policy might provide. Each rider is an add-on that adjusts the policy to better suit the individual's circumstances, making it a valuable feature in life insurance planning.

In contrast, other options presented refer to distinct concepts unrelated to the definition of a rider. For instance, a clause for annual policy adjustments refers to policy flexibility but doesn't capture the essence of a rider specifically. A cash value investment option pertains to the savings aspect of some life insurance policies, while a discounted premium option highlights pricing strategies rather than modifications to policy coverage. Riders specifically address enhancements or changes to existing coverage, which makes the definition you selected the most accurate in describing their role in life insurance.