Life insurance riders are add-ons to a life insurance policy that provide more coverage or protection and that can opt at the time of policy issuance or renewal. . A life insurance rider is an agreement you make with your insurance company to purchase additional benefits to your policy. Some common riders include disability, critical illness, long-term care insurance, and more.
Different Types of Life Insurance Riders
There are several types of life insurance riders, every life insurance rider has different purposes and offers different benefits. Some commonly used life insurance riders are
- Accidental Death Benefit Rider:
The accidental death benefit rider provides additional coverage to the policyholder in case of the death of the policyholder due to accidental means. In most cases, accidents may not result in the on-the-spot death of the life assured, in such cases; the insurance company provides time duration after the accident occurs to provide the given cover. A total of 100% accidental death benefit sum assured would be paid to the nominee on the death of the policyholder in addition to the base death benefit sum assured mentioned under the policy.
For instance, if the base sum assured under the policy is Rs.50 Lacs and the accidental death benefit rider sum assured is Rs.50 Lacs, in case of death of the policyholder due to accidental means the beneficiary would get a total of Rs.1 Crore (50 lacs base + 50 lacs rider). The sum assured provided under this option would be over and above the base, sum assured for an additional premium to be paid by the policyholder.
- Accidental Total and Permanent Disability Rider:
In case of accidental total and permanent disability to the policyholder, a sum assured would be provided to the policyholder by the insurance company. The sum assured to the provided under this rider would be separate from that of the base death benefit sum assured.
For instance, if the base sum assured under the policy is Rs.50 Lacs and the accidental total and permanent disability rider sum assured is Rs.50 Lacs, in case of accidental disability of the policyholder he/she would get a total of up to Rs.1 Crore which includes the base sum assured as well as the rider sum assured. To avail of this rider, the policyholder has to pay a certain amount of premium to the insurance company.
- Critical Illness Rider:
Critical illness rider is the most preferred rider because critical illness rider provides claim in the vent of policyholder contracting critical illness such as Cancer, Heart diseases, tumors, organ failure, etc. Critical illnesses are listed in every insurance company’s terms and conditions before buying this rider it is advised to check the list to make sure if you have been diagnosed with any critical illness is mentioned in the list.
- Waiver of Premium Rider
Waiver of premium is a rider in a life insurance policy that waives off the premium payments by the insured if the policyholder suffers from critical illness, accidental disability, or serious injuries. The waiver of premium rider is available on payment of additional premium to the insurance company. Waiver of premium rider usually comes with Accidental Total and Permanent Disability rider or with Critical Illness rider.
- Accelerated Death Benefit Rider:
In an Accelerated Death Benefit Rider, if the life insured person is diagnosed with a terminal illness, the insurance company can provide a part of the sum assured amount in advance. The amount receivable can be used for the treatment of the life insured. If in case of life insured dies due to terminal illness such as cancer, heart ailments, kidney failure, paralysis, etc. during the policy term then the remaining sum assured can be provided to the family of the life insured.
- Term Rider:
In Term rider, if the insured person dies due to an accident or illness the nominee of policyholder will receive a monthly income or a lump sum. The amount of rider benefit can be equivalent to the base plan coverage of the life insurance or it can be a pre-decided amount already mentioned in the policy.
- Hospital Cash Rider:
In a Hospital cash rider, if the insured person has to be admitted to the hospital for treatment then a fixed amount of rider benefit will be paid to the policyholder depending on the daily expense of the hospitalization.
- Income Benefit Rider:
In Income benefit rider, a regular source of income to the family in case of the demise or disability of the policyholder. This rider will help the life assured to ensure that insured family members maintain a healthy lifestyle even if he/she is not around.
What are the Benefits of Life Insurance Riders?
Life insurance riders are a type of extension to the life insurance policy. They are designed to provide coverage for any special needs that an individual may have. Riders, sometimes called "endorsements", usually address unforeseen circumstances or needs including disability income protection, funeral expenses or other death benefits, and long-term care costs. You will want to make sure that you know the precise meaning and implications of different policies before adding them to your policy. Let us understand the benefits of life insurance riders, and what these add-ons can do for your financial safety.
- Financial Protection: The main benefit of a life insurance rider is they provide further protection in case someone dies while still on their policy.
- Affordability: Buying a life insurance rider is much more affordable than buying a separate life insurance policy. And since you get to choose what riders you want, it is more cost-effective. Riders usually cost more than regular life insurance, but they can also be worth it for some people.
- Cash Value: Riders can also pay out cash values when you cash in your policy or upon death if you were not able to cash it out beforehand.
- Tax Benefits: You can enjoy tax benefits on riders according to the prevailing income tax laws.
Why Should Buy Life Insurance Riders?
Life insurance riders offer more protection for those with specific needs. People may buy a life insurance rider to protect their family from the financial burden. Riders protect your family if you should die and can cover things such as education expenses, a home mortgage, or the medical bills from the last years of life.
Riders work along with the base life cover. Buying separate policies for different covers not only increases the premium but also makes it even tough to manage all the policies. However, riders do not come with such concerns and help prevent the purchase of multiple additional base policies.
In conclusion, life insurance riders are an affordable way to increase the coverage of your life insurance policy. It is a great way to protect yourself and your family, and it can help you sleep better at night.
How to Add Life Insurance Riders to Policies?
We all know life insurance is a financial need that many of us have, but the issue is that not everyone wants to get it or needs it. There are two ways to do this. One way is to get a separate policy for the last event. The other way, which is typically more cost-effective, is adding riders to your current policy.
The first thing you want to do when you are thinking about adding life insurance riders onto your current policy is comparison shop. This will help you determine how much coverage you need and which company has the best rates for your needs. You can also take what you learned in this step and use it to negotiate with your current provider on better rates. If they won’t budge on their rates, then odds are they won’t budge.
How to Choose the Ideal Life Insurance Riders?
Following points to consider before buying an ideal life insurance rider
- Need - Life insurance policies come with a wide range of add-on covers or riders each rider has different features and benefits. It is important to identify the purpose of the rider before purchasing it. Keep your specific requirements in mind and see which of the rider is in line with them before you buy.
- Affordability - It is advised to pick a rider that suits your budget limit as you will be required to pay an additional premium in exchange for it because the total premium would increase after buying an additional cover, you need to make a wise decision keeping the affordability factor in mind.
- Check Terms & Conditions - Read all the policy terms and conditions carefully before buying life insurance riders.
PolicyBachat is an online insurance web aggregator in which you can know about different life insurance riders along with features and benefits as per your requirement. Compare life insurance quotes to buy/Renew the best life insurance online now.