Term insurance is one of the most popular forms of Life Insurance allowing basic life protection for the insurer without paying a hefty premium. Term insurance plans do not offer investment benefits, but offer a protective cover for the tenure period of the policy. The upside of term insurance plans are their cost effectiveness making it ideal for virtually every individual or working member of the family. Term insurance plans come with various specialized add-ons also known as riders, covering all aspects of life insurance from accidental death to disability or unexpected onset of a critical disease. Let us take a look at various aspects of term insurance and its associated riders.
Understanding Insurance Riders:
Riders or insurance add-ons are additional benefits that one can purchase along with the basic term insurance policy to enhance the risk cover. Most life insurance companies offer certain basic riders or add-ons that users can choose from to enhance their life insurance policy coverage. Each rider comes with its own premium and all such selected insurance add-ons can enhance the overall premium payout of the policy. Since a large number of people opt for term insurance plans because of their cost-effectiveness, users have found it convenient to opt for certain additional riders to cover their risk as per their risk structure.
Advantages of Term Insurance Riders:
A 30 year old non smoker male for example can easily get a term insurance cover of up to Rs 1 Crore by paying a premium as low as Rs. 10,000 per year. While this may sound like a good plan, the user looses out on any protection in case he gets involved in an accident and gets partially or permanently disabled. The various riders come in to offer an additional benefit to the insurer in order to cover any accidental death, accidental disability and others offering a well optimized and covered life protection plan.
Popular Term Insurance Riders:
Here is a list of popular term insurance riders that provide an extra added benefit apart from basic life insurance cover provided by the term insurance plan. All such riders and add-ons come with an extra premium but considering the benefits offered they are worth a serious look. The basic features offered in the term insurance plan do not get affected in any way while taking any of the additional riders. The basic sum assured as per the term insurance policy remains unchanged. Let us take a look at some of the popular term insurance add-ons available in the market today.
Accidental Death Rider:
In an accidental death rider add-on the nominee of the insurer gets an additional sum apart from the sum assured in the event of unfortunate death of the policy holder in a road accident. There is a common misconception that unless the user opts for an accidental; death rider add-on the money would not be paid for accidental deaths. This rider offers an additional sum of money to be paid to the life insurance policy nominee as per the money pre fixed during the selection of accidental death rider clause. For example if someone has a term insurance policy of Rs. 20 Lakhs and an additional accidental rider add-on worth Rs. 5 Lakhs, the nominee would get a total of Rs. 25 Lakhs in case of accidental death of the policy holder.
Critical Illness Rider:
Critical illness rider provides as additional benefit through a lump sum payment if the insurer is diagnosed with any critical illness as mentioned in the policy and or specified in the rider clause. Some of the most critical diseases including cancer, stroke, heart disease, kidney failure and paralysis, which are covered in most critical illness riders. The term insurance policy may get terminated once a critical illness disease is detected. It is therefore essential to understand the terms and conditions of payout offered by critical illness rider before signing up for the same.
Partial and Permanent Disability Rider:
In the event the life insurer gets partial or permanent disability as a result of an accident, the partial and permanent disability rider pays the insurer a certain pre approved percentage of the sum assured over the next five to ten years as per the rider clause. This payment is made to replace the income generation that the insurer might loose due to his or her disability. Permanent and partial disability rider is often offered in collaboration with the accidental death rider add-on. Make sure to check with your service provider in case they offer such an add-on independently.
Waiver of Premium:
Waiver of premium add-on as the name suggests allows the policy holder to keep his or her life insurance policy running in case one is unable to pay future premiums due to disability leading to loss of income. The future premiums are usually waived off if such a rider clause is taken by the policy holder. The waiver of premium clause makes sure that the tenure of the policy remains unchanged and the protection offered by the policy remains the same for the pending tenure while wavering off the due premium.
Term rider add-on works in a similar manner to the term insurance plan. In case a person opts for a term rider, the sum assured under the term rider gets payable to the nominee of the insurer if he or she dies before the expiry of the policy. The rider can be customized and can offer payout of either equal to sum assured or any predetermined value as defined in the Life Insurance policy.