Under a term insurance policy, the policyholder also enjoys the prerogative of choosing different options along with the policy in order to get enhanced and overall protection.
When you plan to buy a life insurance policy, you must always consider buying a term insurance plan. This is no doubt one of the simplest and most cost-effective insurance products available in the market today. Term insurance plans are designed and customised in such a manner that in the event of the sudden death of the policyholder, the beneficiaries receive the sum assured as a lump sum or monthly income, whichever the dependents choose.
Under the term plan, the insured pays the premium to the insurer until the policy tenure against which the insurer provides insurance cover to the policyholder. Under a term insurance policy, the policyholder also enjoys the prerogative of choosing different options along with the policy in order to get enhanced and overall protection. These options are better known as riders.
What are Term Insurance Riders?
Based on specific needs and requirements of the policyholders, insurers give an option to policyholders of customising their term insurance cover with add-ons, also known as ‘riders’. Riders are basically like accessories which can be attached to the main insurance cover to enhance its overall value and functionality. They are additional features that need to be purchased along with the basic policy. Riders in a term insurance are very important to customise the policy for enhancing the sphere of benefits.
As per your individual needs, you may choose the right rider for your term cover by paying an extra premium amount. A rider usually comes into play on an occurrence of the specific event for which the rider is purchased. As a policyholder, it is very important for you to choose the right rider with the term insurance to enjoy the required benefits.
1. Accidental Death Rider
Not all would know the fact that India continues to be the accident capital of the world with over 150,000 people being killed each year in just road accidents. The numbers are even higher than most developed auto markets across the globe including the US. However, roads are just another example as accidents often happen at construction sites, home, and many other potentially safer places as well. While a simple term insurance plan gives you normal death benefit, an accidental death rider offers a supplementary sum assured if the policyholder passes away due to an accident. This rider is very important for people with high-risk jobs as it provides the dependents with extra financial help.
2. Waiver of Premium Rider
A very popular rider among the policyholders, the waiver of premium rider keeps the term insurance plan active even if the policyholder is not able to pay the premium due to some unavoidable circumstances. The rider mostly comes into action when the policyholder losses on the monthly income due to a certain unexpected event like partial or complete disability due to an accident. The rider can also be availed during a critical illness when the policyholder losses on the monthly income and fails to pay the premium amount. During such an event, the rider takes the financial burden off the shoulder of the insured by waiving the premium till the term plan tenure.
3. Critical Illness Rider
Some major critical illnesses like cancer, heart attack, kidney failure, coronary artery bypass, and paralysis are some of the diseases that can surely dry out a person’s finances if there is no adequate cover in place. For all such situations, it is best to have a term plan with a critical illness benefit as a rider. It is a rider that helps to cover the cost of critical illness during both, hospitalisation and non-hospitalisation expenses. Critical Illness rider provides much-required cash flow during the recovery period as well. On diagnoses of the illness, the rider provides the policyholder with a lump sum benefit. If unfortunately, the policyholder dies during the critical illness, the term insurance plan benefit is paid to the nominees.
4. Income Benefit Rider
In case of sudden death of the sole breadwinner of the family, it becomes very difficult for the dependents to replace the income. With the help of income benefit rider in a term insurance plan, the family receives a regular income for a fixed number of years. The income benefit rider is an addition to the existing life insurance policy as it provides the beneficiaries with an amount equal to the policyholder’s monthly income. The dependents get additional income for approximately 5-10 years along with the total sum assured. The rider is best suited for salaried people who are also the sole breadwinners of the family.
(By Santosh Agarwal, Head-Life Insurance, Policybazaar.com)