Term Insurance Riders

A term insurance rider is simply an additional cover that you, as a policyholder, can select along with the basic term insurance policy to broaden the policy coverage benefits. To include these riders, however, it is necessary to pay an additional amount in the premium.

Term life insurance riders such as critical illness provide cover against multiple diseases, medical conditions, and accidental injuries. The following sections of this article will help you enhance your understanding of term life insurance riders and their benefits in the insurance plan.

Some of the Most Common Term Insurance Riders

To begin with, some of the most important term life insurance riders are discussed in detail below –

• Critical Illness Rider –There are several medical conditions that could render an individual medically unfit or permanently or temporarily disabled, or even prove fatal. This term insurance rider can help users bear the treatment costs and the costs of medication in such situations.

For instance, if an individual is the sole earner in the family and is infected by a terminal illness, the cover that their family receives with the critical illness term insurance rider will meet the medical requirements and help them fulfil their financial expenses.

Some of the diseases covered in this ride include –

• Kidney failure
• Strokes
• Cancer
• Cardiac arrest
• Heart attack
• Parkinson’s disease
• Organ failure
• Alzheimer’s disease

 

• Accidental Death Rider –If the policyholder passes away due to an accident, this term life insurance rider offers an additional cover along with the regular death benefit. The additional sum assured varies as per the providers, with some providers adding a cap on this rider for the maximum sum assured limit.

The additional sum assured is computed on the basis of the actual assured sum. It must be noted that the premium remains the same for this rider throughout the policy tenure.

• Accidental Disability Benefit Rider –Under this term insurance rider, the insurer pays the individual a percentage of the sum assured for a specific duration in case they are partially or completely disabled due to an accident. This benefit is ideal for those who work in hazardous locations or travel often. This term life insurance rider covers permanent total disability, temporary total disability, and permanent partial disability.

One of the most remarkable aspects of this rider is that it can work as a reliable source of income in case the policyholder loses employment due to the accident, with the compensation often paid regularly for at least 5 to 10 years.

Tip: You can pair this rider with an accidental death benefit to broaden the coverage terms of your plan.

• Accelerated Death Benefit Rider –If the insured is suffering from a terminal disease, their family will be given a portion of the sum assured in advance by this rider, which can help them easily pay for the medical treatment and the related costs.

A key aspect to remember here is that the amount that would be paid will be debited from the final amount to be paid. The sum assured that one would be paid in advance with this rider is mentioned under this term life insurance rider.

• Waiver of Premium Rider –This term insurance rider waives the need to pay premiums in case the insured is seriously ill or injured or has developed a disability as a side effect of a disease or accident. This rider can be obtained by paying an extra fee along with the premium.

There is a waiting period under this term insurance rider during which there is no claim benefit. This waiver is useful if the policyholder cannot work in their normal capacity due to an illness or injury. Please note that the benefits and the terms and conditions could vary based on the term insurance plan you purchase and the insurance provider you select.

• Income Benefit Rider –This term life insurance rider works as an alternative to the regular income of the family of the policyholder in case the latter passes away, with the sum assured under this rider serving as a source of income. Under the income benefit rider, the number of monthly instalments to be paid is already decided by the health insurance company. These instalments will be provided to the insured individual’s family if the former passes away.
• Permanent and Partial Disability – Several diseases or accidents can result in permanent and partial or temporary disability. Such disabilities could keep the insured bedridden and result in unemployment and loss of income along with high medical expenses. With the permanent or temporary disability rider, however, the policyholder will receive the sum assured as per the level of disability they have suffered.

Why and When Should You Consider Adding a Term Life Insurance Rider to Your Plan?

A term insurance policy, as we know, protects the family of the insured individual against financial turmoil in case of the latter’s demise. However, if the policyholder is the sole earner in the family, they should consider purchasing a rider that secures their family’s finances even in their absence.

The following are the reasons why you should pay an extra amount to the premium and consider including a term insurance rider in your policy –

• No Need for Multiple Policies –Though term insurance plans generally offer a high sum assured, it does not cover some of the most unfortunate circumstances. Usually, one term life insurance is not sufficient for your family and you might want to purchase another policy -  this is where term insurance riders come to play.

You can easily purchase a term life insurance rider and broaden the scope of coverage in the policy. Including a term life insurance rider in one policy is better than managing several term insurance policies.

• Saves the Costs of Purchasing an Additional Policy –Purchasing several term insurance policies, along with the increase in benefits, results in extra costs. For this reason, it is advisable to include the term insurance riders as they are affordable and do not amount to the payment of the entire premium.

• Added Financial Support to the Family –The central goal of a term insurance plan is to provide financial aid to the family in case the policyholder passes away. Even if including an add-on sounds like an expense, it can be highly beneficial by working as an additional source of income for their family.

The sole earners of a family are generally advised to include term insurance riders to leave behind a large corpus and keep the family afloat in critical times.

One can also look at an example to understand the need for the term life insurance riders. Say a person purchases a term life insurance policy but avoids including the riders. In such a situation, their family will not be able to meet the basic financial requirements in case of an unforeseen circumstance, which could include accidental disability, unpredictable death, and more. Consequently, to ensure that one’s family stays financially secure in any circumstance, it is necessary to include term insurance riders.  

Key Takeaways

• A term insurance rideris an additional cover that a policyholder can go for along with the basic term insurance policy to broaden the policy coverage benefits. To include these riders, it is necessary to pay an additional amount in the premium.
• Term life insurance riders like critical illness rider provide financial protection against various diseases, medical conditions, and accidental injuries.
• Some of the most popular term insurance riders are critical illness rider, accidental death rider, accidental disability rider, waiver of premium rider, and more.
• If you are the sole earner of your family, you should consider including the term insurance riders in your term insurance policy. A rider can broaden the scope of coverage and reduces the need to manage several term insurance policies at once.
• The ultimate goal of a term insurance plan is to provide financial aid to the policyholder’s family in case the former unfortunately passes away. So even if including an add-on may appear an additional expense, it can crucially serve as an additional source of income for the policyholder’s family in their absence.