Most buyers don’t properly use term riders. What are they?

Oct 10, 2019 | 1 month ago | Read Time: 3 minutes | By iKnowledge Team

Nikhil was looking for term policies online. He was looking for life insurance plans that provided a high sum assured without pinching his pocket. He found a term plan with a coverage he wanted, but the policy offered an accidental death rider and charged him extra premium. Nikhil was firm on not spending over his budget, and picked a plan with a lower premium, which had no riders, thinking it was not useful.

The awareness among policyholders about riders is very low. But riders can turn out to be very beneficial, especially since they provide coverage and protection over and above the term insurance death benefit.

What are term riders?

Term policy riders are those available with a term life insurance policy.  One of the things to consider while looking for a life insurance policy are the riders that come along with the policy. A term policy does not have a maturity benefit. It provides only a death benefit. Riders provide additional benefits in case of other scenarios such as illness.

There are different riders that are commonly available with insurance policies. These can be opted for while buying the policy online or else they can be added on if you inform the insurance agent or the insurance company.

These are some of the most important term riders:

  1. Critical illness:

Under this rider, the policyholder is paid the rider sum assured on diagnosis. This helps with immediate medical costs. Some of the critical illnesses covered under this rider are:

  • Coronary bypass
  • Heart attack
  • Cancer
  • Kidney failure
  • Stroke
  • Paralysis
  • Organ transplant
  • Heart valve surgery
  • Surgery for aorta – related diseases
  1. Accidental death:

This rider pays the entire rider the sum assured when the policyholder dies due to an accident. This rider sum assured is a percentage of the policy sum assured. The percentage varies from insurer to insurer. This rider is a must have for people who travel frequently on business or work in risky professions.

  1. Disability:

This rider pays the policyholder in case of disability. It pays either 100% of the rider sum assured or 50% depending upon the extent of disability. This rider also waives off future premiums under the term plan. This means no further premiums are payable and the policyholder’s family will still receive death benefit after his death.

  1. Accidental death, disability and dismemberment:

This rider pays 50% or 100% of the sum assured in case of accidental death, accidental disability or accidental dismemberment.

  1. Waiver of premium:

This is the most important rider, because it waives off future premiums in case of critical illnesses and disability. The benefit of this is it does not put a further strain on the finances of the policyholder.

  1. Women’s critical illness:

This term rider is specifically for women. It deals with critical illnesses that are specific to women, such as malignant cancer of female organs, i.e. breast, uterus, cervix, pregnancy where the child has a congenital disorder, complications during pregnancy. Most riders do not include pregnancy, so this rider is absolutely essential for a term plan that women purchase.

  1. Accelerated death benefit:

This rider comes in use if the policyholder is diagnosed with a terminal illness. This rider pays the sum assured in case of terminal illness which can help to offset the high medical costs incurred in treating a terminal illness. This rider is an excellent supplement to a medical insurance policy.

  1. Income benefit:

Under this term rider, there is additional income provided to the policyholder’s family after the death benefit.

Buying adequate life cover is an excellent way of ensuring financial safety and security of your family. But by simply opting for these term riders, you can ensure even better coverage for a marginal cost. If you are planning to buy a life insurance policy, make sure to inquire with your insurer about the available riders.

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