When purchasing a life insurance term plan, it makes perfect sense to choose an optimal level of sum assured based on your requirements. In most cases, riders play a crucial role in determining your total benefits as they allow a certain kind of modification in the policy of a term plan. Here, we take a glance at the different types of riders that can maximize your term insurance benefits.
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What are riders?
In simple terms, riders are purely optional added benefits that help you customise your term policy according to your needs. They are relatively cheaper than the cost of your basic life insurance policy and provide you with a cover over and above what your policy offers. If riders are selected carefully, they can add significant value to your life cover.
What are the different types of riders?
There are many different types of riders that you can add to your basic life insurance policy and they come into play in the occurrence of a specific event. They can be great additions to your life insurance term plan based on the age at entry as well. However, no riders are offered after the age of 65.
Here’s a look at the different types of riders and how can you maximize term insurance benefits with them.
- Critical Illness Rider: This rider provides additional cover if the policyholder has been diagnosed with a critical illness. The other option for a critical illness cover is a separate health insurance plan. However, this would mean two different policies and premiums. Hence, a rider would be a more convenient and cheaper option. With the health concerns in today’s world, it is reasonable to add this type of rider.
- Accidental Death Benefit Rider: This is one of the most popular riders around as accidents come with a lot of medical expenses for the family. An accidental death benefit rider is useful in the case of the policyholder’s death because of an accident. The nominee will receive the sum assured upon the passing of the insured. It is ideal for someone working in a hazardous environment to take up this rider.
- Waiver of Premium Rider: If an accident renders the policyholder permanently disabled, this rider becomes active and all premiums thereafter are waived. More so, the policy continues, providing the insured with protection for life. However, no benefits will be available with a lapsed insurance policy.
- Accelerated Death Benefit Rider: This rider can be activated if the policyholder contracts a terminal illness that reduces his/her lifespan. In such cases, this rider increases the death benefit by a certain percentage for the nominee.
- Income Rider:In this case, the policyholder’s family receives a monthly income for a specified number of years even after the insured has passed away. This duration is decided while opting for the rider and is considered very useful as it provides financial stability towards the family for the long term and can help them pay for regular expenses. This is an appropriate rider to add if you are the sole breadwinner in the family.
- Term Insurance rider: This rider is simply a way to increase the risk cover to a basic life insurance policy. By paying a nominal increase in the premium, the policyholder can avail a higher sum assured.
Insurance companies offer various kinds of riders to offer better risk protection to people and you can choose your riders based on their relevance and importance. However, before adding a rider to your term insurance plan, it is best to know about the policy terms and conditions in a bid to make the most of your policy. You should plan your current and future risks accordingly before deciding to add riders to your term insurance plan.