The Tribune, Article by Rajiv Jamkhedkar-Insurance Riders

Monday, January 7, 2013

RAJIV JAMKHEDKAR 

RIDERS are an add-on to the base insurance pol-icy and cover circumstances not covered under the basic policy Riders are special policy provisions that can be added to a policy to expand the benefits, otherwise payable. Apart from the basic life cover, most of the insurers offer additional riders that cover various contingencies like accidental death, disability, critical illnesses, etc. Riders aim at providing enhanced protection to cover risks that are beyond the scope of the basic insurance plan, resulting in a more comprehensive protection. These add-ons are crucial in situations where the main life insurance pol-icy may not cover a particular risk. 

ADDITIONAL BENEFITS 

Riders are special policy provisions that can be added to a policy to expand benefits, otherwise payable. Apart from the basic life cover, most insurers offer additional riders for contingencies. 

With a marginal increase in the insurance premium rate, it is sensible to opt for riders for an added protection against any unforeseen or unfortunate circumstance. This helps to face the situation and get life back to normal 

Nominal costs, with the increase in premium depending upon the riders that are selected. 

Why does one need riders? 

Situations like a severe accident may result in absence from work, leading to loss of income, which is not covered under the basic life cover. An accident rider covering disability would help the insured by compensating monetarily during this period. Likewise, if the insured is diagnosed with a critical illness, not covered by the basic cover, a critical illness rider would provide a lump sum upon diagnosis of such an illness. It can thus take care of the coping costs. 

Opting for riders makes one eligible for tax deductions. For instance, an accidental death rider provides tax deductions under section 80 C and can be claimed on premiums paid; for critical illness, the relevant section of the Income Tax Act, 1961 is 80D. 

What are the different types of riders? 

•Critical illness rider: This ridercovers life-threatening illnesses like cancer, coronary artery bypass surgery, heart attack, kidney failure, major organ transplant, stroke, paralysis, heart valve surgery and surgery for a disease of the aorta If detected with if any of these, the insured is paid the sum assured. 

• Waiver of premium on critical illness rider: In case of some serious illnesses, all future premiums are waived-off by the insurer. This ensures that the base insurance plan continues even in the absence of premium.

• Women specific riders: Such riders are specially designed for women to provide added protection from women specific illness and other risks. On diagnosis of any of the illness / conditions, the benefit amount is paid. Some of the ill-nesses covered are malignant cancer of the female organs and pregnancy complications and congenital abnormality in a newborn child.

• Accidental death/disability/dismemberment riders: In case of an accidental death, such riders give the nominee an additional payout along with the sum assured. In case of a permanent disability or dismemberment, such riders cover the risk of income loss due to permanent disability. The benefit amount is paid out in case the insured is unable to work, loses any of the limbs or vision, or has a dependent living for performing routine tasks. 

How to choose a rider?

To identify the rider best suited, consider factors such as age, regular mode of commuting to work and history of illnesses in the family. Below mentioned points help in opting for a rider: 

• Read the rider brochure carefully. Understand the key features and know what all it covers. 

• Research online and weigh the benefits and price being offered by various insurers. 

• Be honest and disclose any existing illnesses and all material facts at the time of application. This may lead to higher premium, but is helpful at the time of lodging a claim.

During a claim, if the insurer detects suppression of any facts that had influenced the insurer in underwriting the application, the insurer may repudiate the benefit and cancel the existing base policy. With a marginal increase in the premium rate it is sensible to opt for riders for an added protection against any unforeseen or unfortunate circumstance. It helps to face the situation and get life back to normal. 

The author is managing director & CEO of AEGON Religare Life Insurance. The views expressed in this article are his own.

Year: 
2013

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