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Understanding Term Insurance Riders

Term Insurance Riders are an additional benefit that can be added to the life insurance coverage to enhance your term plan. Learn to know more about the advantages of insurance riders.

  • 3,757 Views | Updated on: Mar 22, 2024

There’s no denying that people do not want a Size Fits All solution for anything. From what you wear to how and where you eat, you appreciate the option to customize everything as per your needs and convenience. Likewise, when it comes to one of the most important financial decisions you take for your family’s secure future, you are looking for ways to enhance your coverage.

When you think of ways to boost your life coverage plan to support your dear family, what proves beneficial is a protection rider! It allows you to add extra security to your plan by paying a slightly higher premium. Term insurance is nothing but a pure life cover policy that provides for your family in case of an unfortunate event. Insurance riders are the extra benefits or privileges that bolster your term plan by shedding a few extra amounts. Term insurance is a fundamental but essential financial product and adding suitable riders to your insurance policy makes it comprehensive, providing extra firepower.

What is a rider in insurance?

Riders are supplemental terms that are optional and often charged separately. They go into effect at the same time as your base policy. A rider provides greater safety and coverage against hazards, to put it simply.

Types of Riders:

The base amount assured and the various kinds of riders contained in your plan determine the maximum coverage that is available under the insurance policy. It’s crucial to keep in mind that the combined premium for all riders cannot be greater than 30% of the premium for your basic insurance.

The various riders that could be a part of your insurance policy are listed below:

Accidental death benefit rider

You can purchase coverage under this policy by paying a single, restricted, or regular premium. Your beneficiaries will benefit from additional benefits with the help of this rider in the tragic event of an accident. The maximum sum assured under the accidental death benefit rider may have an upper limit, which varies from insurer to insurer.

Critical illness rider

If you add a critical illness rider to your standard insurance, the policy will pay you a lump sum payment if you are found to have one of the illnesses it covers. Heart attack, renal failure, cancer, coronary artery bypass, major organ transplant, paralysis, stroke, and several other serious illnesses are some of the critical illnesses covered by this rider. Depending on the terms and circumstances, the insurance may either continue after a diagnosis of the covered condition or expire. Following a reduction in the amount provided to you as a lump sum upon diagnosis, certain insurers may offer lesser coverage.

Permanent disability rider

This rider is offered if an accident leaves you permanently incapacitated. When you add a permanent disability rider to your base plan, the insurance provider might give you regular payments for a predetermined amount of time. This coverage and the accidental death benefit rider can be combined. When you become disabled accidentally and are unable to work, this rider guarantees you a living wage.

Income benefit rider

If you are the family’s main breadwinner, this rider is advised. Your beneficiaries receive extra money each year for a certain period of time in the event of an unfortunate event during the policy term. This is offered in addition to the standard benefits covered by your basic insurance plan.

Advantages of Insurance Riders

A rider offers further protection and coverage against dangers. Insurance riders are cost-effective additions to your life insurance policy that you can select. They strengthen and enlarge your policies so that they pay for more than simply the price of your passing. The following are a few benefits of ULIP Riders.

  • They provide supplemental coverage, which is advantageous during economic downturns.
  • Purchasing a rider is far less expensive than purchasing a separate insurance policy.
  • It increases the insurance policy’s affordability.
  • It enables you to modify your insurance coverage.

Riders: The Insurance Add-Ons

While most term insurance policies benefit riders, their costs and conditions vary per the term policy, premiums and the company. Buying a term rider means paying extra, but the additional premium is generally low because relatively little underwriting is required, and their sum assured is less than the insurance cover. These premium amounts depend on different aspects like – the sum assured, age of the policyholder, policy term selected, payment term, etc.

Some riders can be purchased as stand-alone insurance as well. Critical illness insurance, for example, is available as a stand-alone policy and a rider with term and health insurance plans. In addition, some of the riders are available as add-ons to your insurance policy.

Term Riders: Quick Facts

You can only take riders with an insurance plan and not buy it separately; rider premium rates are less than those for term insurance policies. Sum assured of riders is generally less than basic insurance plans. Riders are helpful when an unfortunate incident occurs to a person.

Riders That Drive Your Coverage

Below mentioned are the common riders in insurance and what they cover:

Accidental Death Rider

An Accidental Death Rider provides an additional layer of security to your family’s future by offering an additional sum assured if you pass away due to an accident.

Essential Facts

It is applicable only in case of an accident since this rider covers untimely death; the premium charged is low and is fixed for the whole term; whether you travel frequently or work in dangerous conditions is taken into account death occurs within three months of the accident, the family is entitled to appended sum assured limit is imposed on the maximum sum assured of death benefit rider

Permanent and Partial Disability Rider

Whether you succumb or survive disabled in an accident, your family would equally be left in the lurch. So, your financial burden in such cases is borne by a permanent or partial disability rider. It protects your family’s future by covering the risk and substituting your income.

Essential Facts

It only takes effect if a person becomes disabled due to an accident. The terms and conditions vary depending on the insurer. This rider is frequently used in conjunction with the Accidental Death Rider.

Critical Illness Rider

Major illnesses such as cancer, heart attack, kidney failure, coronary artery bypass surgery, and paralysis not only have an emotional impact on you and your loved ones, but the necessary treatment can also deplete your savings. Upon diagnosis with a critical disease pre-specified in the policy, the Critical Illness Rider can cover you with a lump sum amount.

Essential Facts

Not all illnesses are covered by the rider, so you need to read the policy documents carefully; ride covers the cost of critical illnesses, unlike health insurance, compensates for the loss of earnings lasts till the term insurance policy. The premium does not increase till the complete duration

Waiver of Premium Rider

Consider a case where you have been paying insurance premiums for a long time but cannot do so due to a disability. In most cases, your insurance will expire, and you will receive a no-death benefit due to non-payment of premiums. However, if you choose this rider, your premiums will be waived if you become disabled during the period.

Essential Facts

The rider waives off your premium, but the plan remains active, reducing the financial concerns about paying future premiums. It is suitable for those with a risky lifestyle issue of faltering in premium payment does not arise

Income Benefit Rider

When you pass away, ensuring a steady flow of income for your family becomes a significant concern. If you opt for this term insurance rider, your family or nominee will get additional income in addition to the sum insured amount for the next 5-10 years.

Essential Facts

A specified percentage of the sum assured will be received by the family/nominee. It is more suitable for salaried individuals who are the primary breadwinners.

Whichever rider you select, you should not forget to read its terms and conditions before opting for it thoroughly. Riders in insurance prevent you from compromising the future of your loved ones by offering additional coverage. It allows your family to remain financially stable and lead a peaceful life with your memories, regardless of whether you are around or not.


Although riders are not particularly complex, many insurance purchasers find it quite challenging to select the appropriate rider for two reasons. One, it can be challenging to select the best riders because there are so many available at reasonable pricing. To increase their own income, insurance brokers aim to sell as many riders as possible. The answer to the issue is to refrain from purchasing a rider only out of curiosity. Always consider whether you actually require additional coverage. For instance, it would be advisable to get an accidental death benefit rider if you frequently travel by road or if your employment involves frequent travel. What are you waiting for? Find the suitable term rider plan for your family right now.

- A Consumer Education Initiative series by Kotak Life

Amit Raje
Written By :
Amit Raje

Amit Raje is an experienced marketer who has worked in various Fintechs and leading Financial companies in India. With focused experience in Digital, Amit has pioneered multiple digital commerce in India. Now, close to two decades later, he is the vice president and head of the D2C business department. He masters the skill of strategic management, also being certified in it from IIMA. He has challenged his challenges and contributed his efforts in this journey of digital transformation.

Amit Raje
Reviewed By :
Prasad Pimple

Prasad Pimple has a decade-long experience in the Life insurance sector and as EVP, Kotak Life heads Digital Business. He is responsible for developing user friendly product journeys, creating consumer awareness and helping consumers in identifying need for life insurance solutions. He has 20+ years of experience in creating and building business verticals across Insurance, Telecom and Banking sectors

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