What is a "policy rider" in insurance terminology?

A "policy rider" refers to an additional provision that modifies the terms of an insurance policy. Riders are typically used to enhance or customize the coverage to better fit the policyholder's needs. They can provide additional benefits, change existing coverage, or exclude certain provisions. For instance, a rider can add coverage for specific events, such as accidental death coverage, or can modify benefits to include long-term care provisions.

Understanding that riders are essentially amendments to the original policy is essential for anyone dealing with insurance, as they help explain how the base policy can be tailored. This customization can provide policyholders with more comprehensive protection or features that align with their individual circumstances or preferences.

The other choices represent different aspects of insurance but do not accurately describe what a rider is. For example, while a document outlining the terms of the policy is essential, it does not capture the modifying function of a rider. Similarly, an investment strategy related to life insurance refers to how cash value is managed within certain types of insurance, and a method for calculating premiums pertains to the pricing of insurance policies, neither of which addresses the concept of a rider.