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Life insurance is essential, as it secures your family’s financial future when you are not around. With this plan, you can leave behind a non-taxable lump-sum for your family members to help them meet their financial needs and life goals.
Besides this, life insurance helps your family to cover your mortgage. Therefore, you must invest in a life insurance policy.
Selecting from the different types of life insurance policies available in the market can be an overwhelming task. It is advisable to invest in term insurance plans over traditional insurance plans, as they offer numerous benefits.
If you are thinking about what is term insurance plan, then read on. A term plan is a pure and straightforward type of life insurance policy that offers high coverage at an affordable premium. One of the added advantages of investing in term insurance is that you can choose appropriate riders (add-ons) based on your preference.
What is a Rider in a Term Plan?
A rider is a feature that you can purchase in addition to your basic term insurance policy. With riders, you can broaden the scope of your policy. They allow you to avail of extra benefits that are beyond your base policy.
With riders, the premium of your policy increases, but it is worth it. The riders’ premium depends on factors like the terms of the policy, age, the sum assured, and frequency of payment.
Different Types of Riders Provided by Insurance Companies
#1. Accidental Death Benefit
As per this rider, the insurer is liable to pay the nominee the accidental death benefit in case of any untoward incident due to an accident. The accidental death benefit amount will be over and above the sum assured.
Let us assume that you have a term insurance policy, which has a coverage of INR 50 lakh along with an additional accidental death benefit rider worth INR 5 lakh. If any unfortunate incident occurs due to an accident during the policy period, your nominee will receive INR 50 lakh as coverage from the term plan and INR 5 lakh as the accidental death rider benefit.
#2. Critical Illness Rider
Under this rider, the insurer covers a list of critical illnesses. If you are diagnosed with any critical illness, the insurer is liable to pay the guaranteed amount as per the rider cover.
For instance, let us say that you have a term life insurance plan of INR 50 lakh and a critical illness rider of INR 10 lakh. In case of detection of a listed critical illness, the insurer is liable to pay you INR 10 lakh, which you can utilize for treatment and hospitalization bills.
#3. Income Benefit Rider
The income benefit rider allows the policyholder to decide how the nominee will receive the sum assured if he or she dies before the policy’s expiry.
For instance, if you have an INR 1 crore term plan and choose an income benefit rider with a five-year tenure, the nominee will receive the sum assured of INR 1 crore in five years, which is INR 20 lakh a year.
#4. Waiver of Premium Rider
In the premium waiver rider, the insurer will bear your premium in case of any unfortunate incident, permanent disability, or critical illness, which results in total or partial loss of income.
This implies that the insurer waives off the remaining premium towards the policy. The amount saved on the premium can be utilized by the family to meet any financial goals.
#5. Accidental Disability Rider
This rider ensures that you will receive the sum assured against this add-on in case of disability due to an accident. However, there are a couple of points to consider. If you are permanently disabled, wherein you cannot work and earn, the insurer will pay you the entire sum assured.
However, in case of a partial disability, for example, if you have lost a finger and can work in the future, the insurer will give you a limited sum.
Wrap Up
A term insurance rider increases the benefits of the policy. In need of time, riders can prove handy. So, analyze your necessities and opt for appropriate riders accordingly.
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