Riders tend to enhance your basic term insurance plan with additional features at an additional premium. However, do you know how each rider benefits you? If you aren’t aware, you will get to know here…
Juggling between a dilemma to buy a term insurance or not is one thing. But, juggling to opt the riders once you finalise your term plan is another big thing. Yes, thousands of questions such as the benefits that these riders offer, the extra premium, so on and so for, may wander your mind. At such a crucial spur of moment, seeking an expert’s advice would make things as easy as a pie. Reason being, you simply don’t want to make things more messy and want to be sure of what you buy is the ‘Best’ deal ever! Let’s begin with a small introduction of term insurance plan.
How and when it exactly works!
Term insurance policy is a cost-effective life insurance policy, wherein you as an insured has to pay a regular premium for a predefined insurance coverage period.
In the event of your untimely demise during the insurance period, your beneficiary will receive the assured sum either as lump sum or monthly instalments. It helps your family in clearing-off your loans and unpaid debts, when you are no longer in the world. Apart from the death benefit cover, term insurance plan can provide an extensive coverage by the addition of riders.
Yes, you got it RIGHT!
Riders, the paid features can actually work smart when the need arises. But, if you simply buy these riders just because your friend or your friend’s friend or your neighbour’s friend has bought, then apologies to say; but you have simply wasted your time and money too! Never imitate someone else’s decisions about insurance. Because, their insurance requirements too may be different than yours. Isn’t it?
Term Insurance Riders Explained well….
Term insurance riders are additional coverage features which can be included in the main term insurance policy to provide an enhanced coverage. While some riders might come inbuilt in term insurance plan, others need to be specifically added in the policy. An additional cost is involved for enclosing such riders in the basic policy. There are various riders available and the insured party must choose the apt one based on his/her lifestyle and requirements. Some of the major riders available are mentioned below:
Accidental Death Rider
Life is unpredictable. In today’s fast paced world, the number of accidents has increased marginally. Accidents can happen anywhere- road, construction sites, and factories and even in a place as safe as one’s home. In such situations, a normal term insurance plan providing normal death benefit i.e. assured sum only, might prove insufficient for the survival of family. With Accidental Death Rider, your family will receive an additional sum insured, if you die in an accident. This rider is best suited if you work in hazardous conditions or travel frequently. The premium charged is relatively low. However, there is a check on the maximum assured sum on this rider. This does not affect the premium though. Premium remains constant throughout the policy period.
Critical Illness Rider
Major illnesses such as heart attack, cancer, coronary artery bypass, paralysis, kidney failure not only affects the person physically and mentally, but also economically. The huge expenses associated with the treatment of these diseases, may not be affordable for everyone. Critical Illness Rider comes to rescue in such tough circumstances.
On identification of any of the diseases that is pre-specified in the policy, you will receive a lump sum money for treatment or for meeting any other financial obligation.
The policy may terminate or continue upon the diagnosis of the major illness depending on the terms and conditions stated in the policy. Therefore, it is important that you read the policy related documents properly to be aware of the critical illnesses covered in the plan and associated terms and conditions. It is better to choose a plan whose rider offers coverage for the maximum illnesses. This rider benefit lasts only within the term insurance policy period. In the event of your unfortunate demise during critical illness, the term insurance plan benefit is handed to the beneficiary.
Income Benefit Rider
This rider is of significant importance if you are the sole earning member of your family. To protect your family financially, even after your death, you must choose this rider. It guarantees that your family receives an additional sum for the next 5-10 years along with the assured sum. This regular income would create a source of inflow for your bereaved family and help them financially. This is highly appropriate for salaried earning individuals who are the only bread-winner for their entire family.
Permanent and Partial Disability Rider
In the event of a misfortune accident, you may lose an arm or leg or eyesight. Due to this disability, you may will no longer be fit to work. This will cause an immense toll on the financial security of the entire family. A disability rider comes to aid in such situations. It provides a financial coverage to the entire family by paying you a benefit in case you suffer from a partial or a total permanent disability.
The full amount of sum assured is provided in case of total disability. A portion of assured sum is given in case of partial disability. The rules associated with this rider varies from insured to insurer. Therefore, you must read the documents carefully while purchasing this rider. This rider is mostly bought in combination with Accidental Death Rider. This rider comes into force only when the policyholder gets disabled in an accident.
Accelerated Death Benefit Rider
Medical expenses associated with treatment of a terminal illness can drain away all the finances of a family. If you have already purchased the Accelerated death benefit rider, your family receives a portion of the assured sum in advance. This money proves worthwhile in your medical treatment. The remaining portion is paid to your family, once you have succumbed to the fatal disease. This is a low-cost rider that comes in very handy during the final days of the patient. The one-time advance lump sum payment is used in the treatment overheads involved in keeping the patient alive. The remaining portion is helpful to provide financial support to the family, when the patient is no longer around.
Waiver of Premium Rider
This rider guarantees that the remaining premiums are waived off, if you are unable to pay future premiums due to some disability or income loss.
In general situations, if you are incapable of paying premiums, the policy lapses and the benefits are reduced. However, this rider ensures that if are suffering from disability, the policy remains active and the future premiums are also waived off. There is no burden regarding payment failure. This rider is beneficial for people who work in hazardous conditions like chemical factories, mining etc, where there are high chances of accidents to take place.
It is clear that riders upgrade a term insurance plan. They help us to plan our family’s future effectively, even if we may not be a part of it. Based on our lifestyle, source of income and work conditions, we must choose the appropriate riders. Accidental death rider and permanent disability rider safeguards our family financially in our absence. Accelerated death rider is helpful in reducing economic stress on family if one suffers from fatal disease. Waiver of premium rider is beneficial if the sole earning member of the family is permanently disabled.
There are various insurance companies in the market that offer term insurance policies and riders at competitive rates. One must understand the rider benefits, associated terms and conditions carefully before making a decision.