Why Should You Add a Rider to a Term Insurance Plan?

Term plans are an excellent option for those looking for a pure life cover. Such plans offer insurance coverage against an unfortunate event of the death of the policyholder during the policy term. The insurance provider offers the sum assured amount to the beneficiary, which may be used to meet various financial obligations. This amount, therefore, acts as an income replacement, especially if you are the breadwinner of the family. Term plans are also known for their affordability, offering a high level of insurance cover at a low premium. Besides, you may enjoy tax benefits towards premiums paid up to an amount of INR 1.5 lakh under Section 80C of the Income Tax Act, 1961. The death benefit amount too may be claimed for tax deduction under Section 10(10D).

What are riders?

Insurers provide allow you to supplement your existing term insurance policy through riders. These riders, also known as add-ons, allow you to enjoy a customized cover at an additional premium.

Following are five of the popular and common riders that term insurers offer.

• Critical illness add-on
  

It is important to note that term plans do not offer coverage for critical illnesses such as heart attack, cancer, or brain tumor, among others. Upon diagnosis of any of the critical illnesses as per your policy document, you are entitled to receive a lump sum amount. This helps you meet medical expenses towards the treatment of the disease without any financial difficulty.

• Waiver of premium rider
  

Financial constraints may prevent you from making premium payments towards your term insurance plan. Opting for a waiver of premium rider ensures that you continue to enjoy the policy benefits even if you fail to pay the premium amount. Your term plan, therefore, does not lapse completely.

• Income benefit rider
  

In case you are the breadwinner of the family, chances are that your family may be left financially crippled in an unfortunate event. To avert such a scenario, you may purchase an income benefit rider. This rider provides a regular stream of income to your beneficiary, for a specified period, say five to ten years. Your loved ones may, therefore, manage their finances easily and have a good lifestyle even in your absence.

• Accidental death rider
  

As the name suggests, this rider in term insurance offers insurance coverage against an accidental death. The insurance provider is entitled to offer an additional sum over and above the sum assured amount, in an event of death due to an accident.

• Accidental disability rider
  

Some accidents may leave you with a temporary or permanent disability. In an occurrence of such an event, an accidental disability rider comes to the rescue. The insurer provides a pre-defined percentage, of the sum assured amount, for a certain timeframe, say five to ten years. This amount may also be treated as an income replacement since you may lose your ability to work on a temporary or permanent basis.

Riders in term insurance maximize your insurance coverage and help you gain control over the financial security of your loved ones. You may, therefore, choose the most appropriate riders according to your requirements and enjoy peace of mind at all times.

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