Many insurance companies include various term insurance riders with their plans however, one should know that not everyone needs these optional built-in covers. As a result, purchasing a term insurance plan with riders may prove beneficial in the long run.
Allow us to explain in detail the optional and additional in-built covers available with a term insurance plan that allows you to supplement your existing plan.
What do we mean by term insurance riders?
Term insurance riders are optional built-in covers that provide additional coverage to policyholders. These are charged separately, and the term plan premiums may rise as riders are added to the plan. Experts advise that one should choose riders that are in line with their financial goals. If you include all of the available optional coverages in your plan, it may not be beneficial to you and can unnecessarily increase your
What are the different types of riders available in term insurance plans, and how do they work?
Accidental Death Benefit: If you die during the policy’s term as a result of an accident, this rider pays the beneficiary an additional sum assured amount.
The total amount to be given to the beneficiary is calculated using the original sum assured. The percentage of the additional benefit may vary from one insurance company to another. There could be a limit on the maximum sum assured under the accidental death riders. It is only applicable in the event of an accident; if the insured dies for any other reason, the beneficiary receives the original sum assured.
Accidental Disability Benefit Rider: The accidental disability benefit provides financial assistance if the policyholder becomes partially or permanently disabled as a result of an accident. Most policies pay out a percentage of the sum assured for five to ten years after the accident. There are various types of disabilities, and whether you have a permanent or temporary disability, the benefit of this rider will apply. It can also be viewed as a rider that provides additional income when you are unable to work or function normally.
Critical Illness Rider: It can be beneficial if you are diagnosed with a life-threatening disease such as cancer, heart attack, kidney failure, or paralysis (to name a few), which would otherwise necessitate significant medical expenses. If you are diagnosed with a pre-specified illness, you will receive a lump sum payment under the critical illness benefit.
Income Benefit Rider: It is intended to give your beneficiary some income following the death of the policyholder. When you include this rider in your term insurance plans, the beneficiaries receive a certain percentage of the sum assured for the next five to ten years after your death.
Terminal Illness Benefit Rider: If you choose this rider and are diagnosed with a terminal illness, it allows your beneficiaries to receive a portion of the sum assured in advance. The advance payout can be used to cover treatment and associated costs. If you die, the remaining amount will be given to your beneficiary.
Waiver of Premium Rider: It is useful when you are no longer able to pay premiums due to disability, loss of life, or income. With this rider, the policy is kept active while future premiums are waived. If you have children, it can be advantageous because the policy will remain in effect and your child will benefit from the policy’s benefits.
So, who should opt for a rider while buying a term insurance plan?
Now that you have understood what is term insurance and the benefits of adding riders, the question is who should opt for these riders. The following points will help you understand the same:
Accidental Disability Benefit: If you are one of those who commute daily and travel frequently should opt for this rider
Accidental Death Benefit: Individuals who travel very frequently or who work in the manufacturing industry associated with high risk can opt for this rider.
Critical Illness Benefit: If you are one of those individuals who regularly consume alcohol and other intoxicated substances such as tobacco regularly can opt for this rider. Even people with a medical history of illnesses such as diabetes and high blood pressure can opt for this rider.
Income Benefit: If you have a dependent, this rider is especially helpful as it provides income support to assist your family during contingencies.
Waiver of premium: Individuals with kids and dependents should opt for this rider.
Reasons to include life insurance riders in your plan.
Enhanced coverage: Adding insurance riders to your policy can significantly improve the safety net offered by your basic term life insurance. In this context, death is typically the source of a family’s financial woes, although disability and life-threatening illnesses requiring costly treatments can be equally terrible. By adding riders to your life insurance policy, you can offer your family additional financial protection in the event of an unanticipated event.
For example, if your base life insurance policy provides a sum assured benefit of Rs. 1 crore, you can increase it by Rs. 25 lakhs with a Critical Illness Rider.
Protection from income loss: If you have a serious illness or an accidental disability, life insurance riders can help you financially. However, this may result in a loss of income, making it difficult to maintain premium payments. You can choose the Premium Waiver Benefit to keep your life insurance coverage from expiring. This implies that anytime you submit a claim for critical illness or disability, your life coverage will continue with no additional premium payments.
So we are saying,
Term insurance riders allow customers to tailor the plan to their own needs. As a result, you should always examine the needs of your family and see if they are getting aligned with certain riders and compare their premium rates online before selecting the one with the best pricing. You can compare them based on the advantages inclusions, and exclusions provided by various companies. Always get clarification from your financial counsellor or a policy agent regarding the rider’s terms and conditions.
