What are term insurance riders and how should you choose them?

Nov 30, 2018 | 5 months ago | Read Time: 3 minutes | By iKnowledge Team

Term insurance riders are add-ons or attachments to a term policy. They provide additional coverage and benefits over and above the death benefit, a part of the term life insurance policy.

Vishwas was researching on term insurance policies and he found that he could get something called as an accidental death benefit of Rs. 5,00,000 on payment of Rs. 200 per year. He was confused. A term policy did not come so cheap. Then what was this benefit that the website asked him to opt for?

The additional benefit the website prompted Vishwas to opt fora term insurance rider. Term life insurance is commonly understood. A term insurance policy is an insurance policy without any maturity benefit. In other words, the sum assured or benefit under the policy is only on death of the policyholder. There is no payout in case the policyholder survives the term of the policy.

But what is a term policy rider? A rider is an additional benefit that is provided over and above the death benefit of a term insurance policy. Some riders may be included in the policy premium as a part of the company policy, and some riders are add-ons that the policyholder has to opt for. In case the conditions for the rider are fulfilled, the policyholder gets extra benefit as stated in the rider.

There are several different riders that a term life insurance policy qualifies for. The common ones are

1.Accidental death benefit rider:

This rider pays an additional sum in case the policyholder dies in an accident. The sum assured under the rider is paid along with the term insurance benefit

2. Accelerated death benefit rider:

This rider is activated in case the policyholder is diagnosed with a terminal illness. The sum assured in such riders is paid on diagnosis which helps the family to tide over the increased medical expenses for treatment

3.Accidental disability rider:

This rider pays a certain portion of the sum assured to the policyholder on disability. Under some policies, such as Aegon Life’s iTerm policy, future premiums are waived on disability. The policy will be kept alive without payment of additional premiums. The iTerm plan provides a comprehensive coverage along with accidental death, disability and critical illness riders.

4.Critical illness rider:

This rider pays the policyholder the sum assured for the rider on diagnosis of a critical illness. The standard illnesses covered are cancer, coronary bypass, heart attack, stroke, kidney failure, paralysis, organ transplant etc.

5.Waiver of premium rider:

This rider waives off any future premiums payable under the policy if the conditions are fulfilled. For example, the premiums may be waived in case of disability, or on diagnosis of a terminal illness.

6.Income benefit rider:

This rider pays a regular income to the family of the policyholder for a defined number of years after death.

7.Women’s critical illness rider:

This rider is specific to illnesses that women are diagnosed with, such as cysts, ovarian cancers etc. They function the same way as general critical illness riders.

How to choose a term policy rider?

 There may be different riders that are available when you look for a term life insurance policy, but which rider will suit you the best is a decision that needs deliberation. Although each rider may not cost a lot, it is important to understand whether you actually need the rider.

Another point to be considered is which riders are automatically included in the term plan premium. Some riders are included in the premium, especially when you’re looking for an online term plan, whereas others are add-ons. Usually, in an online term plan, accidental death benefit is combined with the regular term policy premium.

Depending on whether you have a mediclaim or health insurance in place, choosing a critical illness rider is in your benefit. The sum assured for such a rider is very nominal and the payout is flexible. If your family has a history of medical illnesses, it is advisable to opt for this rider to offset the medical treatment expenses.

If you are the only earning member of the family, taking a waiver of premium rider, a critical illness rider, and a disability rider will be in your benefit. These riders give a payout in case of diagnosis or disability, which will help the family to replenish some of the lost income.

Choosing a term life insurance policy is very easy in these times. It is possible to get an excellent coverage along with riders online. Make sure you buy a term policy along with riders to give you thorough coverage.

II/Oct 2018/4509


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