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Term plans are known to be one of the simplest policies by design andare also relatively lowcost. The primary benefit offered by these policies is the death benefit. However, if you seek to spruce up your term plans, you can do so through riders.
What Are Riders?
In case of term insurance plans, riders are add-on features offered with the base plan. Depending on their requirements, the policyholder can choose from the options available, and thus, customise their plan.
Term insurance riders are optional. Also, the type of riders offered with yourplan may differ from one insurance provider to another. You can choose all available riders, or none. It is important to consider your expectations from your plan, and affordability, before making the choice.
Types of Term Insurance Riders
When choosing your policy and the riders along with it, it is essential that you understand what each of the riders is meant for and how they can add value to your policy. Here is a look at some of the commonly available term insurance riders.
- Premium Waiver Rider
This rider allows provisions for the premium payment to stop in the event of the demise of the policyholder. The rider may also be inclusive of other possibilities that make it difficult for the policyholder to make premium payments, such as critical illness and accidental permanent disability.
If any of the aforementioned events occur (and are covered by the rider/policy), the premiums on the plan can be stopped without any risk of policy lapse. The policy will continue to offer the life cover and any other benefits agreed upon.
- Accidental Death Benefit Rider
If the person insured passes away as the result of an accident, this rider will allow for the payment of additional benefits to the nominee. The nominee can make claims and expect additional benefits in case of such an eventuality.
The composition of this benefit may differ across insurance providers and policies. Read through the policy details carefully to understand the full extent of the benefits of this rider.
- Accidental Total/Partial Permanent Disability Rider
Partial or total permanent disability can alter a person’s life by limiting their capabilities, and consequently, their opportunities. It may affect their livelihood and in turn, their family. In case the disability is caused by an accident, the rider allows the policyholder to seek additional benefits. This will help them recover from their accident, and alsohelp cover the costs of treatment, recovery, and care.
- Critical Illness Rider
A critical illness diagnosis is usually followed by extensive medical care, possibly hospitalisation, and periods of recovery. This financial burden may be made heavier with the cost of long-term medicines, and the possible effects that the health issue will have on your livelihood.
When you get a critical illness term insurance rider, you can get support from your policy in case you get diagnosed with any of the listed conditions while the policy is in force. This rider will provide you with a lump sum that may help you deal with the ensuing costs of your illness.
Why Should You Get Term Insurance Riders?
Term plan riders may come at an additional cost and thus, make your policy slightly more expensive. You can use a term insurance plan calculator to figure out the various combinations of riders and the cost it will add to your policy.
However, when done right, these riders will make your policy much more valuable to you. Riders allow you to get the best out of your term plan. Choosing riders that are suitable for you can help you stay prepared for any future emergencies. These may also help you earn tax benefits.
How To Choose Riders?
Riders are a significant aspect to consider when buying your term plan. Once you have your estimates through an online term insurance plan calculator, take a look at the riders available and their costs. Shortlist the ones you think would be right for you.
When adding your riders, ensure that your add-on cost is not exceeding the original premium amount of the plan. Your final premium after rider additions should not be more than 30% higher than the base premium amount.
Also, it is ideal to have the benefits made available through riders to be higher than the core sum assured. These add-ons may have age limits, so it is advisable to know about these, especially if you plan to add any rider to your policy at a later time.
Riders are a way to enhance your basic term insurance plan with features that you may expect to find a use for. Doing it wisely may help you get the best out of your life insurance.
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