What are the must-have riders that you should add to your term insurance?

Term insurance provides financial security to your family members in the event of you passing away, with the death benefit amount paid by the insurance provider after your death, within the policy term. To expand the scope of term insurance policies and to help you tackle some of the unforeseen events of life such as critical illnesses, accidents, and disability, you can make use of the term insurance policy riders.

Suresh Agarwal works as a senior manager with a multinational company and lives with his two sons and wife in Gujarat. He has a term life insurance policy from LIC which has a coverage of Rs. 1 crore. He had bought this policy at the age of 30. A cancer diagnosis rocked his world and he was advised to undergo treatment immediately, leaving his family with no other option but to move to Chennai, for cancer treatment. Suresh had added a critical illness rider to his existing term plan, three years, before he got diagnosed to safeguard himself from lifestyle diseases. Because of his move to buy a critical illness rider in LIC, he was able to bear the medical expenses since this rider provides a part of the sum assured as a lump-sum amount to the policyholder in case of critical illness diagnosis. With this, he could clear all the costs related to treatment, hospitalization, and post-surgery care. Though term insurance doesn’t provide such a facility, Suresh`s presence of mind to avail the riders proved very useful at the time of need. 

To increase the policy’s coverage by securing yourself against certain scenarios and for added protection, riders can be attached to your existing term policy. However, these riders are to be purchased for an additional cost, which is added to the policy’s premium. After the benefits of the rider have been taken advantage of, it could cease to exist, while the policy remains in effect.

6 Important Term Insurance Riders you should know about

There are many variants of term insurance policies in the market but you have to pick only from a few essential riders. Let’s look at them in more detail:

Critical Illness Rider: This is an essential rider of all riders. If the policyholder is diagnosed with one of the critical illnesses mentioned in the rider, like stroke, cancer, kidney failure, heart attack, burns, paralysis, etc. the lump-sum amount is paid to cover the costs of treatment.

Accidental Death Benefit Rider: In case an insured person dies in an accident, the death benefit of the rider is paid to the person named as the nominee as well as the death benefits guaranteed under the standard life insurance plan. For instance, if the insured had taken a term insurance policy for a sum assured of one crore and selected an accidental death benefit rider worth Rs.25 lakhs, the total amount payable is Rs.1.25 crores if the insured is killed in an accident.

Accidental Permanent/ Partial Disability Benefit Rider: Sometimes, an accident might not result in death for the individual, but it could render the person disabled completely or partially. This makes it challenging for the insured to work and pay the premiums during the insurance policy’s term. This type of rider can be very beneficial when it is possible to become permanently or temporarily disabled because of the incident. In addition to the waiver of future premiums, certain insurers will also offer a specific amount over the next couple of years but still offer coverage benefits.

Premium Waiver Benefit Rider: As the name suggests, you will be aware that this rider offers the benefit of not having to pay premiums in the event of the policyholder getting disabled or injured and in a position, where he is unable to pay the premiums during the term of the policy. In some instances, premiums for the future are fully exempted based on the policyholder’s health. The term insurance policy typically is canceled in the event of a premium not being paid, but with this rider, one can receive the benefits of the insurance even if they’re not able to pay the premiums.

Family Income Benefit Rider: This rider is very beneficial for those who have a lot of dependents to care for. This rider will ensure that your family will be financially secure, even after your demise. The benefit rider aids the family members of the policyholder through tough times by offering them an income every month, ranging from 1 to 10 percent of the sum assured for a certain number of months or even years. It is possible to select a suitable amount of money, based on the requirements of the family members and their general lifestyle. 

Term insurance rider benefits

Having known about the important riders one can avail for term insurance policies, let us look at the benefits of these add-ons.

• Affordability: Instead of buying an insurance policy separately to cover such specific risks, purchasing a suitable rider is more affordable since you’ll pay just a few hundred extra rupees.
• A wide selection: There’s a rider option for every issue that arises in life. This makes it simple to select and enhance the term plan to your requirements and expectations for the future.
• Additional Coverage: A term insurance plan by itself gives you decent coverage. However, adding a rider on it provides you with total protection, and can make your life easier and less stressful in times of financial turmoil.
• Income Tax benefits: As these riders are part of the term plan, the premiums paid are eligible for tax deduction under sections 80C and 80D of the Income Tax Act.

With riders available with term insurance plans, it’s your responsibility to determine which one is the best term insurance plan most important to you as well as your family. In times of uncertainty, it’s not a good idea to miss any option that comes up that can help you protect yourself by acquiring insurance.