Term insurance refers to extra coverages which you can opt for with a term insurance plan to enhance the plan features and coverage. Different riders offer different benefits against the payment of a nominal premium. Some of the most popular term insurance riders include waiver of premium rider, critical illness rider, accidental death benefit rider, etc.
Most term insurance plans come with riders, which differ in terms of cost as well as terms and conditions. To understand types of term insurance riders in detail, read below:
1. Accidental Death Benefit Rider: With an accidental death benefit rider, one can avail additional sum assured in case the insured dies in the misfortunate event of an accident. The additional sum assured is calculated on the basis of the original sum assured and may differ from one company to another. The premium remains fixed for this rider, for the entire policy term. However, some plans may put a cap on the maximum sum assured that can be availed.
2. Accelerated Death Benefit Rider: The family of a person suffering from a terminal illness like cancer, asthma, kidney failure, lung damage, etc. ends up paying a huge amount for medical expenses incurred due to the treatment. But with accelerated death benefit riders, the family receives a part of the sum assured in advance, which can be of great help in difficult times.
3. Accidental Disability Benefit Rider: In the unfortunate event of an accident, if the insured suffers from partial or permanent disability, then they can be benefited from this rider. Most of the time, term insurance plans pay you for 5-10 years after the accident causing disability, if you are covered under this rider. Often coupled with accidental death riders, this rider can be treated as a source of income.
4. Critical Illness Benefit Rider: With a critical illness benefit rider, the insured can receive a lump sum amount on diagnosis of listed critical illnesses as specified in the policy document. Generally, term insurance plans cover you for cancer, stroke, paralysis, kidney failure, heart attack, major organ transplant, amongst others. The policy can either be continued or terminated after diagnosis of a critical illness, as per the terms and conditions stated in the policy.
5. Waiver of Premium Rider: As the name suggests, it waves off the future premiums in case the policyholder is not able to pay future premiums due to disability or loss of income. It can be said that this way you can ensure your premium payments until the policy gets expired. In case the insured does not have this rider, and suffers from a disability or is unable to pay the required premium due to some other reason, then the policy will expire and no death benefit will be paid as the premiums were not paid.
6. Income Benefit Rider: This is another useful rider that can be purchased by paying an extra premium at the time of policy purchase. This rider can be treated as a source of income in the misfortunate event of the death of the policyholder. With this rider, the family of the policyholder can avail additional income every year along with the regular sum assured, for up to 5-10 years.
Benefits of Term Insurance Riders
Riders offer greater cover under your term insurance plan. But there are other benefits of purchasing term insurance riders as well. Some of them are explained below:
1. Enhanced Sum Assured: Some term insurance riders also enhance the total coverage. For instance, if your base term insurance policy has a sum assured benefit of Rs. 1 Crore, and you get a critical illness benefit rider, then you can avail coverage for extra Rs. 25 Lakh as well.
2. Protection for Family: One of the most important benefits of term insurance riders is that they offer the most needed financial protection to the family of the insured in case of a misfortune event. The riders offer protection not only in case of death but also in case of permanent or partial disability, life-threatening illnesses like cancer, stroke, kidney failure, etc.
3. Affordable: Term insurance riders offer great benefits at affordable premiums. It is better to go for riders than buying separate covers, for instance, for accident and critical insurance as that would cost more. Also, the insured will have to manage more than one policy at a time. Also buying riders help you avail combined benefits with the same policy, which otherwise might require you to purchase different plans.
Before adding riders to your term insurance plan, it is recommended to go through the associated benefits, and all the inclusions and exclusions under them, in detail. Assess your requirement for these requirements and then make an informed decision after a complete analysis.