What is a "rider" in an insurance policy?

A "rider" in an insurance policy refers to an addition or modification to the base policy that enhances or alters its benefits or coverage. Riders allow policyholders to tailor their insurance policies to better suit their specific needs. For example, a life insurance policy might include a rider that provides an additional death benefit if the insured is diagnosed with a terminal illness.

This customization can address various scenarios such as critical illness, accidental death, or long-term care, allowing policyholders to expand their coverage beyond what is included in the standard policy. Riders are typically attached at the time of purchase but can sometimes be added later, depending on the insurance provider's policies.

In contrast, other options do not accurately define a rider. Claims documents pertain to the process of filing a claim after an event has occurred, premium reductions refer to discounts or lower rates offered by insurers, and cancellation notices relate to the termination of an insurance policy. Thus, understanding the function of a rider as a tool for policy modification is crucial in insurance practice.