Mumbai (Maharashtra) [India], August 24: Everyone should have life insurance as part of their financial and life planning. It is primarily intended to safeguard your family financially in the event of your death. However, life insurance plans serve a variety of other goals, including tax savings, helps you to save, helps you to provide a streamlined income in your retirement, and so on. Furthermore, simply purchasing an insurance plan does not protect you from all the potential threats. One may wonder what kind of threats we are speaking about here.
For example, you could get in an accident, and the injuries, or worse, disability, could limit your capacity to work. In the lack of regular income, paying the premium for your term life insurance plan will become difficult due to hospital bills. This is when life and term life insurance riders come into play.
What are riders?
Riders are additional benefits that allow you to tailor your existing term life insurance plan to your specific needs. They cost less than your life insurance policy and offer additional coverage beyond what your policy provides. The usual cost is between 5% and 10% of the base policy. Ideally, you should purchase riders at the start of the policy. The earlier they are taken, the less they will cost. One should keep in mind that the amount paid for a rider cannot exceed 30% of the premium paid on the base policy.
Understanding Insurance Riders
Riders are important insurance instruments that allow you to customize and improve your existing coverage. Riders can add specific solutions to a regular policy, such as additional term insurance or critical sickness coverage. Consider your policy such as whole life insurance as a foundation for financial security. Riders are like personalized extensions, adapting the base to your specific requirements. They are optional terms that supplement your base insurance, usually at an additional fee.
Types of riders
Critical Illness Rider: This rider provides additional coverage in the event that the policyholder is diagnosed with a serious illness. Insurance companies usually have a list of diseases that qualify as critical illnesses. The list varies per company, but most covers cancer, heart attack, coronary artery bypass, kidney/renal failure, paralytic stroke, and major organ transplant.
Accidental Death Benefit Rider: This is a popular rider. Accidents cause a lot of medical bills for the family. As a result, an accidental death benefit rider is useful in the event of the policyholder's death due to an accident. The Nominee already receives the Sum Assured from the term life insurance plan or whole life insurance policy upon the insured's death. They receive an additional amount while using an ADB rider. For example, if the basic term life insurance policy has a sum assured of Rs.35 lakhs and a rider of Rs.15 lakhs, the nominee will receive Rs.50 lakh.
Accident and Disability Benefit Rider: An ADDB rider provides additional coverage in the case of disability due to an accident. Some insurers also provide temporary disability coverage. Some even waive the premium because the insured may not have a proper income due to disability, making paying premiums difficult. If this benefit is not accessible, you can also request a separate premium waiver rider.
Waiver of Premium Rider: If an accident permanently disables the life insurance policyholder, this rider becomes activated, and all subsequent premiums of the term life insurance plan will be waived off. Your whole life insurance will still be in effect, offering the policyholder lifetime protection. Some WOP riders provide coverage for catastrophic conditions including open-chest CABG, cancer, stroke, and a first heart attack.
Accelerated Death Benefit Rider: This is useful if the policyholder contracts a terminal illness that reduces their life span. In such instances, the rider improves the nominee's death benefit by a specified percentage.
Income Rider: In the event of the policyholder's death, their family will receive a monthly income for a set number of years. This duration should be selected while selecting the rider. This is a very essential rider because it protects the family in the long run and helps them pay for monthly expenses.
To sum up
Insurance riders are an effective strategy for increasing your insurance coverage whether it is a simple term plan or a whole life insurance plan. They provide numerous benefits, ranging from improving protection and increasing coverage to providing unique benefits and ensuring your insurance remains in effect during difficult times. When you add riders to your term life insurance plan, you should calculate your premiums and ensure that your policy meets your needs and priorities. Consider riders as your key to comprehensive and personalised protection for you and your loved ones, delivering peace of mind in every life's twist and turn.
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