What are Insurance Riders?
Simply put, an insurance policy rider represents a provision or modification to an existing insurance policy that provides additional coverage, that is, additional protection against risk. Riders are effective add-ons you can opt for along with your current term insurance policy at affordable rates, to expand the life insurance coverage. In other words, riders make your term insurance coverage robust and wide, covering more than just the finality of demise.
Types of Riders
- Premium Waiver Benefit Rider Normally, term insurance would lapse when one stops paying premiums. This waiver benefit means that if the policyholder becomes disabled or injured for a sustained period, or in case the policyholder dies while the life assured under the policy is alive, all future premium payments due under the policy after the date of such an incident will be waived, that is, not required to be paid. Even so, the benefits under the policy shall continue to be available to the life assured. This rider also extends to permanent and partial disability.
- Accidental Death Benefit Rider This is a rider benefit payable if the life assured dies during the rider benefit term from a cause which is accidental. In such an event, the accidental death sum assured is payable in addition to the basic sum assured.
Here’s an example: a person who already has an existing accidental insurance policy for Rs 20 lakhs and has no liability may not need to include the accidental death benefit with his term insurance policy. But if he is inadequately covered under life insurance and is financially incapable of taking another policy for accident cover, then he may opt for the accidental death benefit. This will be an affordable mode of creating that additional financial protection for his survivors in the unfortunate case of his accidental death.
- Critical Illness Rider This rider benefit is paid in case you get diagnosed with any of the critical illnesses listed in the policy document, like cancer, stroke, heart attack, kidney failure etc. The critical illness sum assured is paid in such an event. This rider benefit and the premium for this benefit ceases thereafter.
How can riders be bought?
Insurance Policy riders are sold separately from insurance policies but at the same time. For example, when you buy your term insurance at Future Generali, you can also opt for the riders it lists. You can buy your insurance policy as you normally would, and then add riders to the policy for the added protection from specific risks, which may be a premium waiver in case of death, accidental death cover, disability cover, critical illness cover, hospitalisation benefits, loss of employment cover, accelerated death benefit etc. However, it is to be noted that these riders should be bought at the time of buying the base policy. Once availed the riders cannot be added again. It is worth taking time to assess whether or not investing in an additional rider is worth the extra expense.
While some insurers have in-built riders in the basic life insurance plans, others have flexible-plans, which can be customised in accordance with your demands. Thus in the latter, you have the option to attach the desired riders to the basic policy rather than be given a ready-made policy with riders you may or may not find a use for.
Benefits of riders:
Insurance Riders are an impeccable way to increase your insurance coverage without taking on a completely new policy. To sum up the benefits of term riders:
They provide extra coverage under term insurance, which can be a very crucial help in times of financial crises.
Affordability: Buying a rider is much more affordable than buying a separate insurance policy. And since you get to choose what riders you want, it is more cost-effective.
You enjoy tax benefits on riders just like you would on the basic policy, in accordance with the prevailing tax rules.
The riders also come with certain stipulations: the premium pertaining to health-related or critical illness riders shall not exceed 100% of premium under the basic product, the premiums under all other life insurance riders put together shall not exceed 30% of premiums under the basic product and any benefit arising under each of the above-mentioned riders shall not exceed the sum assured under the basic product.
In conclusion, it is important for you to know what riders your insurer offers along with your policy so you can take advantage of the affordable add-on benefits.