Term insurance policies are an important part of financial stability, providing a safety net for corporate professionals in the case of an early death. However, many consumers fail to notice the additional benefits that riders may provide to these plans. Riders are extra features that may be added to your term insurance policy to improve coverage and give customised benefits.
Understanding and applying these riders will help protect your family from a variety of hazards. Let’s look at the many sorts of riders available in term insurance policies in India, and how they may greatly improve your coverage.
Riders in term insurance plans
Accidental death benefit rider
The Accidental Death Benefit Rider pays an additional benefit if the insured dies from an accident. An additional layer of financial security to the beneficiaries is provided by this rider which increases the sum assured. This rider provides a more financial cushion in case of sudden and unforeseen circumstances.
Suppose a policyholder has a base coverage of ₹50 lakhs and has an accidental death benefit rider of ₹20 lakhs and in case of an accidental death, the beneficiaries would be paid ₹70 lakhs. Families can use this to pay immediate expenses such as funeral costs and paying debts, so that they can concentrate on their emotional recovery at a time when it is needed most.
Critical illness rider
It is a lump sum payment rider if the insured is diagnosed with any one of the critical illnesses including cancer, heart attack, and kidney failure. Covered conditions are listed by the rider and can differ from insurer to insurer. The financial aid in this case is important to meet high medical expenditures, purchase required medication and even undergo advanced treatments.
For example, if a policyholder is diagnosed with cancer the lump sum can help cover the cost of treatments like chemotherapy or surgery and take some of the financial pain that goes along with such a diagnosis. This means the policyholder gets to receive the best medical care without the worry of outrageous costs.
Disability benefit rider
The Disability Benefit Rider is important in the event of total or permanent disability as a result of an accident or illness, and the policyholder gets part of the sum assured. This rider is crucial because it ensures the policyholder’s lifestyle as well as ensures that their financial obligations are met, for example, paying bills or supporting family members.
For example, if a policyholder becomes permanently disabled and has a sum assured of ₹1 crore, the rider may allow them to receive a pre-determined amount, say ₹30 lakhs, to help cover lost income and manage living expenses. This financial support can be vital in preserving their quality of life during a challenging period.
Waiver of premium rider
Term insurance plans with a Waiver of Premium Rider is great, as it waives all future premiums if the policyholder becomes disabled or diagnosed with a critical illness. It makes sure the policy is still active in hard times without adding an extra cost burden to the insured.
For instance, if a policyholder becomes diagnosed with a serious illness and cannot work, they won’t have to continue paying premiums. While it will continue to cover their beneficiaries, it will not cost them extra.
Family income benefit rider
With this rider, the family would get a regular monthly income in case the insured dies, during a difficult time. The rider instead provides fixed monthly payments for a fixed period of time, helping the family manage ongoing living costs, such as rent, school fees and daily needs.
For instance, if a policyholder chooses a family income benefit rider that pays ₹50,000 per month for 10 years, the beneficiaries get the same support consistently, which helps them adjust to the loss of income and keep their lifestyle.
Terminal illness rider
The Terminal Illness Rider is available if the policyholder is diagnosed with a terminal illness has a limited life expectancy and can access a portion of the death benefit early. This is often an immensely helpful way to cover the very expensive medical treatments, hospitalisations, or end-of-life costs that may come up.
For instance, in the case where the death benefit is ₹1 crore, the rider could permit the policyholder to withdraw up to ₹50 lakhs for medical care. This financial support will help lessen the stress on the family during a period of emotional stress.
Income benefit rider
The Income Benefit Rider is the same as the Family Income Benefit Rider except that the payment is in fixed amounts at fixed intervals, so the family continues to receive income even after the insured’s death.
Families also get a sense of security when the insured is the main breadwinner. For example, a rider may offer the policyholder the guarantee of ₹40, 000 per month for 15 years after their death, which would ensure that the family has a steady income stream to cover monthly expenses and other financial commitments to reduce the risk of financial instability.
Child education rider
The Child Education Rider is a smart add-on which allows you to give a lump sum amount which can be spent on the educational expenses of the policyholder’s children in case of unfortunate death of the policyholder. The children’s education is not compromised, because of the circumstances.
For instance, a policyholder might choose a rider that pays out ₹20 lakhs in case of his death, this can be used to pay for his children’s schooling, college education or vocational training. This rider is a commitment to the children to have a bright future in the absence of the parent.
Return of premium rider
The Return of Premium Rider pays out the total sums paid if the policyholder outlives the term. But this rider may make term insurance more appealing to those who think they are missing out if they live longer than the policy.
Let us take an example if a policyholder pays ₹50,000 per year for 20 years he/she gets a lumpsum of ₹10 lakhs back at the end of the term. It does give a sense of security and assurance and gives the investment a feeling of being worthwhile, and not lost.
Premium waiver for critical illness rider
This rider waives future premiums if the insured is diagnosed with a certain serious disease. It guarantees that the policy remains active without the financial burden of ongoing premium payments.
For example, if a policyholder is diagnosed with a major disease, such as a heart attack, this rider implies that they will not have to pay premiums for the period of their sickness, ensuring that their life insurance stays valid and protecting their family’s future.
Ending note
Riders in term insurance plans are critical to improving the coverage and overall efficacy of your policy. By selecting different riders, you may customise your term insurance to meet your specific financial demands while also providing comprehensive protection for your family.
Riders like accidental death benefits and critical sickness coverage not only improve the claim settlement ratio but also guarantee that your family is financially secure during challenging times. Understanding these choices allows you to make more educated decisions, protecting your family’s future while maximising your term insurance plans.