Riders are solely meant to increase the level of the policyholder's protection coverage making the term insurance plan much more comprehensive.
Most people usually prefer buying life insurance, be it for themselves or their family members. When compared to other types of life insurance policies, term insurance is cheap and better. Having said that, experts say, even though term insurance is popular amongst individuals, most people don’t opt for term riders.
Riders are solely meant to increase the level of the policyholder’s protection coverage making the term insurance plan much more comprehensive.
Term insurance protects the policyholder’s family financially, in case of his/her untimely death. However, there are times when due to an unfortunate event, the policyholder suffers from a critical illness, or disability leading to significant financial loss. Under such situations, a rider comes into play.
These riders, also known as add-ons, add more coverage to a policy and increase the protection without having to purchase a separate policy. Add-ons can be bought by just paying an extra premium amount which is less than the premium of a term insurance policy. Experts say, even though there are various riders available, an individual depending on the needs and requirements, should customize their term plan.
Some of the popular insurance riders include critical illness add-on, accidental death and waiver of premium, etc.
Accidental Death Benefit Rider – With this rider, in case of death during an accident, the insurance company pays the sum assured of the accidental death rider, along with the addition normal term insurance death benefit. For instance, if Arvind has a basic sum assured is 80 lakhs and have opted for this accidental rider of Rs 30 lakhs to his policy, the total claim amount would be Rs 1.10 crore, given the death occurs due to an accident. Generally, the accidental death rider ranges from Rs 125- 150 per month along with the base premium.
Critical Illness Rider – To get protected against major life-threatening diseases, one could opt for the critical illness rider. With this add on, the policyholder gets eligible to receive a particular amount of sum assured upon diagnosis of any critical illness listed with the insurance provider. In general critical illness that is included are cancer, heart attack, organ-related diseases, stroke, etc.
Waiver of Premium Rider – As the name suggests, with this add-on, the policy premium is waived in case something happens to the policyholder. For instance, if the policyholder becomes disabled due to an accident or gets diagnosed with a critical illness, wherein he/she becomes unable to pay future premiums, with this rider, all the future premiums will be waived off till the end of the term rider. Although the cost of the rider varies for each insurer depending on the age and other important factors of the policyholder, the cost of the rider usually varies from Rs 30-40 per month for a non-smoking 30-year old male.
Accident Disability Benefit Rider – With this rider, in case the policyholder becomes permanently disabled due to an accident, without resulting in death, this add-on rider kicks in. Hence, if a policyholder becomes permanently disabled in an accident, then the insurer pays the sum assured. Therefore, experts say it is always recommended to buy riders such as waiver of premium, accidental disability rider along a term insurance policy.