Many citizens are not familiar with riders in insurance. What are riders? Well, to get to know riders, you better learn what term life insurance is. A Term life Insurance plan is a life insurance plan, which provides coverage across the tenure of the policy. If a policyholder dies within the policy term, then death benefits will be paid to the beneficial nominee as mentioned in the policy documents. If you outlive the tenure of the term insurance plan, you don’t get anything.
A beneficial nominee gets the right to use the death benefits received under the term life insurance plan. If parents, spouse or children are nominees under your term insurance plan, they automatically become beneficial nominees.
Insurance riders are provisions of an insurance policy that add or amend the basic coverage of insurance. In other words, insurance riders are additional benefits that you can include to your basic insurance plan to enhance insurance coverage as per requirements.
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Nominees get the death benefits in term life insurance, only if the policyholder dies within the policy term. Say, you are diagnosed with a critical illness or meet with an accident and suffer permanent disability. Will the term life insurance settle the claim? No, because term life insurance only pays nominees if the insured dies within the term of the plan. Term insurance has no survival benefits.
Where will you arrange funds for treatment? Had you availed a critical illness or accident benefit rider, this rider would have covered cost of treatment. However, most insurance riders come at an additional cost.
In this article we will see insurance riders specific to term insurance:
Types Of Term Insurance Riders
A new term life insurance policy would mean additional premium and medical tests (if you are aged 45 or above). It is a costly affair. By availing a rider, you will save money and achieve the purpose of covering risk.
Note: Check with the insurer if they allow you to add riders.
Now, that you know what a rider is and why you are better off availing riders rather than a new policy, let’s have a better understanding. Following are some common term insurance riders which can prove to be handy if availed as per needs.
You may enjoy good health, but given the sedentary lifestyle, you could be diagnosed with a critical illness. Some critical illnesses are:
Though you have availed a term life insurance, it won’t cover treatment of critical illnesses. The treatment costs of a critical illness are very high. Without a Critical Illness rider, the coverage on the basic term insurance plan would be useless, as hospitalization costs for critical illnesses are high. Where will you get money for the treatment?
Had you availed a critical illness rider, you would be in a position to claim a good amount for treatment and hospitalization.
A Waiver of Premium insurance rider allows you to stop paying premiums, after certain events. Usually, the event can be a Critical Illness or Disability.
The essence of a Waiver of Premium rider is that it allows you to stop paying insurance premiums, if your regular income dries up due to an accident or critical illness. So, if you are diagnosed with a critical illness and have a Waiver of Premium rider in the term insurance plan, you will not have to worry about premium payments. Your insurer will take care of them.
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Let’s say you got a new job and the associated occupational risk is high. You are working as a fireman. This job is extremely hazardous. A term life policy will not help you. However, if you avail a Personal Accident rider, it would cover partial and permanent disability. Partial disability can be a loss of limb, sight, speech, hearing and so on.
Note: The premiums on a Personal Accident rider are based on job risk.
Let’s say you are suffering from a terminal illness. How will you arrange funds for treatment? However, had you availed the Accelerated Death Benefit Rider, the insurer would give a part of the sum assured in advance to your family.
If you are the breadwinner of the family, how will your family survive if something were to happen to you? In such cases, an Income Benefit rider proves to be of great help. An Income Benefit Rider not only pays the sum assured to your family, it also pays an additional income (sum) per year for 5 to 10 years.
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