Are you trying to add benefits to your term insurance policy but aren’t sure what alternatives are available? Distinct types of term insurance riders can give additional coverage that is customised to your individual needs, making your policy more comprehensive and advantageous. Read on to understand.
Distinct kinds of riders
∙ Critical illness rider: Covers the illness with a one-time payment in case of being diagnosed with specific critical health conditions like cancer, heart attack, or stroke to cater to treatment expenses.
∙ Accidental death benefit rider: Pays an extra amount in the event of the insured’s death through an accident to the nominee in addition to the basic sum assured.
∙ Permanent disability rider: If the insured is permanently disabled by accident or illness, this rider pays a regular income or a lump sum which assists in avoiding the disruption of cash flow.
∙ Waiver of premium rider: It excludes future premiums if the insured is either disabled or critically ill so that the policy continues without costs.
∙ Income benefit rider: Pays a fixed amount of money to the nominee at specified intervals over a specified period of time besides the one-off payment, thus spreading out the support.
∙ Term rider: Provides an opportunity for the consumers to purchase other policies to meet other needs apart from the base term insurance. This allows the consumer to buy extra covers depending on his or her changing life cycle needs.
∙ Return of premium rider: Offers a cash value which is the sum of all premiums paid throughout the policy period in case the insured is alive at the expiry of the policy period.
∙ Hospital cash rider: Provides daily cash benefits while the member is confined in the hospital due to sickness or accident, thereby catering to other incidental expenses besides the hospital bills.
∙ Accidental total and permanent disability rider: Pays a single amount of cash if the insured loses his or her ability to work due to an accident and is not expected to work again, making the insured financially stable.
∙ Family income benefit rider: Offers the possibility of having an assured monthly income to the family in the event of the insured’s death, catering to daily and other regular expenses.
Benefits of term insurance riders
∙ Enhanced coverage: Additional coverage benefits of the policy are provided under the term insurance riders, which offer the basic sum assured. These riders relate to certain risks that may not be well provided for by the base policy on its own. For instance, critical illness riders allow a client to receive a cash payment upon being diagnosed with certain diseases, in addition to the coverage offered by the basic term insurance plan.
∙ Customisation: Customisation benefits in riders enable the policyholder to choose the extent of coverage they require depending on their needs and budget. It guarantees all-around cover that can be aligned with certain risk types or life stages. For instance, a waiver of premium rider can be included to exempt future premium payments when the insured is disabled, allowing them to continue using the policy without struggling financially.
∙ Financial security: Riders complement the policy by offering extra coverage in situations such as sickness, injuries, disability, or other mishaps. This ensures that the insured and their family have adequate financial protection against such events. For example, an accidental death benefit rider offers an additional payment if the insured’s death was a result of an accident, ensuring that the nominee receives more money.
∙ Cost-effectiveness: It is less expensive to include riders within a term insurance policy than to purchase individual insurance policies for each specific risk. Riders are generally cheaper when compared to standalone insurance products, making them an effective way to enhance coverage comprehensively. This way, policyholders can control their insurance costs while getting more extensive coverage.
∙ Flexibility: Riders provide options to modify coverage based on changes that may occur in the policyholders’ lives. Existing covers can be increased or decreased depending on financial changes such as marriage, the birth of a child, or career promotion. This makes the insurance coverage relevant and sufficient at different points in life, thus covering various phases and milestones.
∙ Mental peace: Understanding that term insurance riders cover other risks brings comfort to the policyholders. It gives them confidence in their daily and career activities without worrying about the financial burden of such occurrences. In addition to the standard coverage, riders help to avoid additional risks and provide stability to the insured and their family.
∙ Tax benefits: Premiums paid towards term insurance riders may be eligible for tax exemptions under section 80C of the Income Tax Act. This tax relief leads to further savings because it decreases the taxable income of the policyholder. This way, the policyholder can claim tax deductions on the premium paid towards riders, increasing the financial value of the term insurance plan.
∙ Continuity of benefits: Some term insurance riders ensure that the benefits continue even in the event of health issues or other life changes. For example, a permanent disability rider gives the insured periodic payments or a single lump sum in the event of permanent disability arising from an accident or sickness. It also ensures that the intended financial protection is not altered or eroded during hard times.
∙ Family support: Riders such as income benefit or family income benefit pay a set amount to the insured’s family regularly after the insured’s death. These riders help ensure that the financial responsibilities of the family, such as daily expenses or children’s school fees, are met even when the insured is not around. This support helps enhance their well-being and stability as a family.
∙ Comprehensive financial planning: Including riders in a term insurance policy enhances comprehensive financial planning since several financial requirements are taken care of under one policy. Riders meet specific risks and objectives like providing for the family’s future needs, covering health costs, and preserving income. This approach also guarantees the adequacy of all aspects of financial security in the attainment of financial goals and objectives.
Ending note
Term insurance riders provide additional features in terms of coverage against critical illness and disability, as well as covering different stages of life. With knowledge of the types of riders and their relevance, getting your term insurance policy will address your need for financial protection and security for your family.
