Term insurance riders

What are Term Insurance Riders?

Are you juggling whether you should choose additional and optional features or stick to the basic plan? Well, this kickstart guide will aid you to know about term insurance riders.

What is Term Insurance Rider?

Term insurance rider is an amendment, endorsement or attachment made in term insurance, which gives you supplementary coverage. Term insurance riders strengthen your term plan by offering multiple add-on benefits besides the core offering of the death benefit.

Many term insurance policies provide the rider benefit. Nevertheless, the added riders, their costs and their conditions vary depending on the insurance provider and the premium. Whilst a few riders are included as a part of the term plan, the other riders are needed to be purchased individually by making a payment of an added premium.

What is Term Insurance?

A term insurance policy is a life insurance product offering financial coverage to the nominated beneficiary of the policyholder for a certain period of time. In case of demise of the insured during the term of the policy, the nominated beneficiary can claim death benefit from the insurer.

However, in the event of survival of the insured, the coverage at the previous rate of premium is not guaranteed after the policy expires. The insured has to either get the extended coverage with various payment conditions or give up the entire coverage.

Benefits of Term Insurance Riders:

A term insurance plan is beneficial in multiple ways. It should be no news that it is one of the most sought-after, lucid and comprehensive insurance policies.

However, there abound certain common misconceptions as far as term insurance is concerned. For instance, one of the most common myths associated with it is that is fiery on the pockets. This is one of the reasons why potential policyholders seem to turn away at first from the prospects of term insurance plans.

However, it must be noted that term insurance plans are some of the most affordable ones in the entire gamut of the insurance world. And the term insurance riders are the ones that ensure additional benefits or privileges to beef up the prospects of a particular term insurance plan.

Generally speaking, a majority of the term plans ensure that they are considerably equipped with riders. However, it is essential to underscore the fact that the riders and their subsequent benefits change from one plan to another. It should be noted that the costs of the plan, the amount of the premium and the respective company are the factors that must be taken into consideration.

Additionally, before buying a term insurance policy, it is generally advised to consult a proper insurance agent or do a thorough study to know about the benefits one may qualify for. Apart from the default offering of the death benefit, all the additional riders are exclusively meant to strengthen the prospects of the term insurance plan.

Types of Term Insurance Riders:

As mentioned before, the insurance riders tend to vary from one company to another. However, the following are some of the uniform riders available under any term insurance plan.

Accidental Death Rider

  • As far as the accidental death rider is concerned, the term is chiefly meant to offer a particular amount of sum assured in case of accidental death of the concerned insured.
  • It is essential here to debunk a widespread myth. Most of the times investors wonder if they would get the sum assured in case the death of the concerned insured is not accidental.
  • However, it must be underscored that the necessary sum assured will be offered irrespective of whether one has bought the additional rider or not.
  • It should be kept in mind that as far as the accidental death rider is concerned, it is expressly to supplement the amount assured if the concerned insured dies accidentally.
  • An example would clarify the position: if one buys a policy of Rs. 70 lakh as sum assured and another Rs. 25 lakh as the accidental death amount, the concerned nominee will receive the former amount in situations of natural death and Rs. 95 lakh for unnatural or accidental death.
  • It may be said that the accidental death benefit is especially propitious for those who lead a dangerous life, travel frequently or work in a vulnerable atmosphere.
  • Premium generally consists of sixty to seventy per cent of the term insurance. Also, it is important to note that in most cases if the death occurs within three months of the accident, the concerned family is entitled to receiving the appended sum assured.
  • However, it is equally important to keep in mind that certain limitations can crop up on the amount of the maximum sum assured of the death benefit rider.

Permanent and Partial Disability

  • Another basic rider is the permanent and partial disability rider. In such a case, it is especially propitious if the concerned insured faces partial or permanent disability.
  • Generally speaking, in such cases, the concerned insured is paid for the succeeding five or ten years on a regular basis in a certain per cent of the original sum assured.
  • The permanent and partial disability rider may be considered as an essential and substantive income source.
  • However, it must be kept in mind that the rider is applicable only when the concerned insured suffers disability owing to accidental circumstances.
  • It is important to mention here that the prospective insured should always make it a point to read the policy dossier carefully before taking up the plan.
  • Often, the wording and the locution of the terms tend to confuse the prospective policyholder. Generally speaking, the permanent and partial disability rider is often combined with the accidental death benefit rider. Therefore, one should not get confused between the latter and the former.
  • Additionally, it may be at times that the said amount to be compensated is disbursed in instalments.

Accelerated Death Rider

  • One of the basic death riders includes the accelerated death benefit. Primarily, it is meant to cater to the situations involving such cases as a terminal illness.
  • Most of the times, the concerned family ends up incurring massive costs for the treatment of the terminal patient. This is where the accelerated death benefit rider comes to help by shelling out a portion of the sum assured in advance.
  • The part of the money disbursed in advance ensures the aggrieved family gets adequate financial assistance during the crisis.
  • What makes the accelerated death benefit rider especially beneficial is the fact that it comes at relatively low costs, apart from mentioning the exact amount of the sum to be shelled out in advance.

Critical Ailment Benefit Rider

  • Another significant insurance rider is the critical illness benefit rider. The critical illness benefit rider is undoubtedly one of the most elementary insurance riders that most of the term insurance plans offer as part of their additional benefits.
  • Simply put, the concerned insured receives with the help of this rider a lump amount upon validated diagnosis of a critical ailment.
  • However, it should be remembered that it cannot be any critical illness. The name should be congruent with the pre-specified diseases in the insurance policy. Nevertheless, most major ailments are part of the insurance plan.
  • Generally speaking, the critical illnesses broadly include heart attack, cancer, stroke, paralytic complications, bypass graft surgery, renal complications, organ transplantation etc.
  • It is generally recommended to thoroughly read the exact policy conditions and exclusions before signing up for this rider.
  • After the detection of a particular illness, the concerned policy may be continued or aborted according to the terms of the plan. It is equally important to keep in mind that some instances the coverage can be whittled by the respective amount as shelled to the concerned insured.
  • Generally speaking, the income benefit rider is especially helpful in that it compensates for the loss of earnings and usually lasts until the expiration of the plan.
  • It should be kept in mind that the amount of the premium of the rider does not increase till the complete duration of the policy.
  • The critical illness benefit rider is covered both by general and life insurance companies.

Premier Waiver Benefit

  • As the name itself suggests, the premium rider is mainly meant to ensure that if in case the concerned insured is not able to shell out the succeeding premiums owing to any substantive reason, they are waived off.
  • What makes the rider expressly propitious for policyholders is the fact that even after the succeeding premiums in the future have been waived, the plan does not terminate.
  • In other words, it can be said that the premium rider plan is almost similar to making the premium payments shielded effectively until the expiration of the policy itself.
  • It should be noted that the rider is a significant addition. In other words, if the rider is not availed of, or the concerned insured is somehow in a position where he or she cannot shell out the premiums, the policy will be deemed to terminate.
  • Apart from the untoward expiration or termination of the plan, the concerned insured will not be entitled to receiving the respective death benefit due to the non-disbursement of the premiums.
  • Therefore, it is important to consider buying the rider to be shielded against the unforeseen circumstances as stated in the points above.
  • Additionally, it is generally recommended to read the policy documents very carefully before zeroing in on to the policy eventually. It is essential to correctly comprehend the fine print and clarify the subtleties inherent in the wording of the terms and conditions.
  • Broadly, it may be said that the premium waiver rider is especially suitable for those whose lives are risky and may involve a rather sharp possibility of untoward accidents.
  • It is equally significant to underscore the point that the question of faltering premium payment does not arise.

Income Benefit Rider

  • One of the most common riders that come equipped with term insurance plans is the income benefit rider.
  • As the name hints, the income benefit rider is meant to cater to the lack of substantive income after the death of the concerned policyholder.
  • It is essential to underscore the fact that with this rider attached to the policy the family of the concerned insured is entitled to receiving additional income per annum for five to ten years.
  • Also, it must be kept in mind that the extra revenue will be accompanied by the regular sum assured.
  • The rider assumes special significance in so far as it provides an effective financial shield to cope up with the loss of the family’s beloved one. Also, the plan is especially suitable because there is clarity, comprehensiveness and is also evidently affordable.
  • Generally speaking, the income benefit rider is mostly included in the term insurance plans. Broadly, certain subtle points might shift here and there. Otherwise, the rider is more or less retentive in its elementary form across a string of term insurance plans from one company to another.
  • So far as the income benefit rider is concerned, it is more suitable for wage-earning or salaried individuals who are the sole breadwinners of their families.

Women’s Critical Illness Rider

  • Although limited only to a few insurance outlets, the women’s critical illness rider has undoubtedly assumed an enormous significance thanks to the sensitivity and the utter difficulty of the subject.
  • In short, the women’s critical illness rider is meant to cover the financial necessities of women in times of such major ailments like cancer in the female organs, the birth of a child with congenital disorder and complications during pregnancy.
  • Generally speaking, across a majority of insurance outlets a per cent of the sum assured is disbursed to the insured if she is diagnosed with a disease that is congruent with the pre specifications as laid under the rider.
  • The rider has assumed a greater significance since its inception, especially in so far as it tackles the menace of monumental female disorders that affect not only the financial currents but also the unique ambience surrounding the woman.
  • Although limited to just a few insurance companies, the rider has emerged as one of the most relevant, sought after and popular term insurance riders.
  • Additionally, what makes the rider especially endearing is the fact that it directly encounters the relevant predicament and is considered affordable.

Over to you!

As may be clear from the benefits of the term insurance riders mentioned above, a rider is expressly meant to beef up the prospects of a particular insurance plan. When an insurance plan does not match your needs, a rider can fill the gaps.  Not only does it covers the perceived lack of a plan, but also ensures exigent crises effectively and in a way that is concurrently affordable.