Term insurance is a simple and affordable form of life insurance that covers a policyholder only up to a certain period of time. If the policyholder passes away during the policy period, their family gets the life cover payout. Term insurance riders are add-ons that you can add to your term insurance policy to increase its coverage. Some riders may be in-built with your term plan, while others are those that you need to add yourself to your term plan. Riders are a great way to make your term plan cover more events than what it does by default, that too, generally, at affordable prices that are more cost-effective than buying individual plans.
Meaning of Term Insurance Riders
Riders are add-ons that one can add to their term insurance policy. Riders offer additional coverage over what the base term plan offers. There are different types of riders in insurance; some riders are available for purchase separately, while other riders can be in-built into your term plan.
One can add riders either while buying their term plan or later on policy anniversaries. However, not all riders may be available after buying a term plan; hence, it’s best to check available riders with your insurer. Also, riders can have their own eligibility criteria; hence, this should be checked as well.
Types of Riders in Term Insurance Plans
Here are some commonly offered riders in term insurance:
1. Critical illness rider: With the critical illness rider, you get a payout if you are diagnosed with a listed critical illness. The payout can help you replace your income and pay for your treatment expenses. Examples of some critical illnesses covered are heart attack, stroke, kidney failure, etc. You should check all the covered illnesses before buying this rider.
2. Permanent disability rider: When you meet with an accident that makes you permanently disabled, your family may struggle financially. The permanent disability rider helps you get a pre-decided payout if you suffer from a permanent disability. This can help in replacing your income.
3. Waiver of premium rider: By having the waiver of premium rider, if you get permanently disabled or get diagnosed with a critical illness, all your future term insurance premiums are waived off, thus helping you maintain the coverage of your term plan.
4. Accidental death benefit rider: With the accidental death benefit rider, your family gets an additional payout, which is over and above the life cover payout, if you pass away due to an accident. This rider can be helpful to those who are frequent travellers or are exposed to accident-prone environments.
5. Return of premium rider: If you are someone who is of the opinion to get your premiums back if you outlive your term insurance policy, you may like the return of premium rider. With this rider, you get your paid term insurance premiums back if you outlive the policy duration.
6. Terminal illness rider: A terminal illness is one where there is no chance of survival. With the terminal illness rider, if you are diagnosed with such an illness, you and your family get the life cover payout immediately when you are diagnosed with a terminal illness. This advanced payout can help in better planning the use of the money.
7. Hospital care benefit rider: The hospital care benefit rider offers financial assistance if you are hospitalized. The benefits may be in the form of a lump-sum payout or daily cash benefit for your hospitalisation period. The benefits can help you in covering up for your medical expenses.
Benefits of Adding Riders to Your Term Insurance Plan
While adding riders to your term plan is not mandatory, adding them can give you the following benefits:
1. Riders offer additional coverage over what the base term plan offers. For example, the accidental death benefit rider provides an additional payout to your family if you pass away during the policy period due to an accident.
2. Health-based riders can help you get tax benefits* under Section 80D of the Income Tax Act, 1961, where you get deductions for the premiums paid to term insurance policies with such health-based riders. Further, the rider premium payments can help you get more deductions under Section 80C of the Income Tax Act, 1961.
3. Some riders (such as the accidental death benefit rider) provide additional financial benefits to the family of the insured.
4. Adding riders to your term plan is generally more cost-effective than buying separate term plans to increase coverage. For example, if you are looking to purchase another plan just because you want coverage for critical illness (in the form of getting a payout for replacing your income and helping in covering the medical expenses during the period of your diagnosis), you may end up saving money by adding a critical illness rider to your existing term plan.
5. Some riders may not have additional eligibility criteria for adding them.
Why Should You Buy Term Insurance Riders?
Term insurance riders are a great way to have additional coverage to your term plan, and they come at generally cheaper costs than buying separate policies. You can check with your insurer about what riders they offer. Based on your needs, you can understand what riders can help you. You can also use the KlarifyLife Term Guide to help you identify which riders you may be needing.
Should I Buy Riders with Term Insurance?
You can buy riders with a term plan or after buying it. It’s advisable to buy the necessary riders along with your term plan, as some riders may not be available after you buy your term plan.
Summary
Riders are term insurance add-ons that offer additional coverage, and they may come with an additional cost. While buying a term plan, understand what riders may benefit you and make a decision on whether to add them or not. Further, it’s best to check with your insurer if your policy also offers any in-built riders.
*Tax benefits & exemptions are subject to conditions of the Income Tax Act, 1961 and its provisions and tax Laws are subject to change from time to time. You are requested to seek tax advice from Chartered Accountant or personal tax advisor with respect to personal tax liabilities under the Income-Tax law
Back
Share
1800-268-0890
