Term insurance is one of the simplest and the most comprehensive means of financial security that can benefit the beneficiaries in case of the policyholder’s untimely passing. At low-cost premiums, one can easily secure themselves against potential life risks at a high sum assured.
However, when opting for a term insurance plan, you can increase its effectiveness by customizing it as per your individual needs. You can do this by opting for riders.
Riders in insurance are basically contingent add-ons or supplementary benefits granted over and above a primary term policy in the event of a definitive eventuality.
Insurance companies today offer varieties of riders to suit the multifarious needs of diverse individuals. With this, they offer greater risk protection to the policyholders and their beneficiaries. You may opt for distinct riders based on their importance and relevance.
In order to choose the most suitable riders, it is crucial to understand the different types of riders as well as the benefits of riders in insurance plans. Having said that, let’s have a look at the riders and their respective benefits.
Critical Illness Rider
Critical illnesses are usually not included in the term policies. Hence, this rider can be included within your insurance plan to cover your family against critical illnesses and ailments such as cancer, brain tumor, heart attack, etc. While covering the cost of medical expenses, these riders also provide tax exemptions under section 80D of the Income Tax Act.
Waiver of Premium Rider
Opting for this rider would ensure that the insurance plan remains active, irrespective of the policyholder failing to pay the premium amounts due to financial constraints. The effect of this rider could thereby redeem the insurance policy from lapsing completely.
Accidental Death Rider
The majority of life insurance policies provide coverage for accidental death. However, opting for this rider would further curtail the financial stress on the deceased’s dependents since it delivers an additional sum coupled with the sum assured disbursed by the insurance company.
Income Benefit Rider
For any family, losing the sole breadwinner could result in a major financial crisis. In order to avert such a scenario, the income benefit rider provides a fixed income for a specified period of about 5 to 10 years. This is offered to the beneficiaries over and above the sum assured.
Accidental Death Rider
The majority of life insurance policies provide coverage for accidental death. However, opting for this rider would further curtail the financial stress on the deceased’s dependents since it delivers an additional sum coupled with the sum assured disbursed by the insurance company.
Accidental Disability Rider
This rider takes effect in case of a temporary or permanent disability caused due to an accident. During such a time, the rider provides regular coverage for about 5-10 years in a pre-defined percentage range of the sum assured. However, it must be noted that this rider comes into play only if the disability ensues due to an accident.
Why You Must Buy Term Insurance Riders?
Term insurance is a popular form of life insurance that provides coverage for a specified term or period. It offers a death benefit to the beneficiaries of the policyholder in case of the policyholder’s untimely demise during the term. However, term insurance can also be enhanced with additional features called riders. These riders are add-on benefits that can provide additional coverage and financial protection to the policyholder and their loved ones.
Customized Coverage
Term insurance riders allow you to customize your insurance coverage based on your specific needs and requirements. They offer additional benefits that can be tailored to your individual circumstances, providing you with a comprehensive insurance plan that meets your unique financial goals. For example, you can add riders for critical illness, accidental death and disability, waiver of premium, and more, based on your priorities and lifestyle.
Enhanced Protection
Term insurance riders provide an additional layer of protection to your policy beyond the basic death benefit. They can offer coverage for events such as critical illnesses, accidents, and disabilities, which can have a significant financial impact on your life. With the right riders in place, you can ensure that you and your loved ones are protected against unforeseen events and have the necessary financial support during difficult times.
Cost-Effective
Term insurance riders are typically more cost-effective than purchasing separate insurance policies for each additional coverage. Adding riders to your existing term insurance policy is often more affordable than buying standalone policies for critical illness, accidental death, or disability. It allows you to enhance your coverage without significantly increasing your premium payments, making it a cost-effective option to get comprehensive protection.
Flexibility
Term insurance riders offer flexibility in terms of coverage and duration. You can choose the type of riders you want to add to your policy and the duration for which you want to avail of their benefits. For instance, you can choose a critical illness rider for a specific term, such as 10 or 20 years, to align with your financial goals. This flexibility allows you to customize your policy as per your changing needs and lifestyle.
Additional Benefits
Term insurance riders come with their own set of benefits that can provide you with financial support in various scenarios. For example, a critical illness rider can provide a lump sum payout upon diagnosis of a critical illness, which can be used to cover medical expenses, loss of income, or other financial obligations. Similarly, an accidental death and disability rider can provide a payout in case of accidental death or disability, which can help you cope with the financial consequences of such events.
Tax Benefits
Term insurance riders also offer tax benefits, which can help you save on your taxes. The premium paid for riders may be eligible for tax deductions under Section 80C of the Income Tax Act, 1961, which allows you to reduce your taxable income by the amount of premium paid. This can result in substantial tax savings, making term insurance riders a tax-efficient investment option.
Rider benefits are made available to provide maximum coverage to you. Adding riders to your plan helps in getting a life cover in situations that are not covered under the insurance plan. Some insurers ask you to add riders at the time of buying an insurance plan, but some insurers allow you to add them later. There are certain important conditions you should know before availing of a rider benefit as per IRDAI (Insurance Regulatory and Development Authority of India):
While you may not possess control over every imminent uncertainty, you can definitely gain control over the financial security of yourself and your loved ones by choosing the most appropriate riders in your insurance plan.
