Insurance companies offer different types of riders and people remain confused which one to pick and which are actually not meant for them. Your insurance agent can guide you to make a right choice but unfortunately most of them remain interested in their own commission. In such a scenario, being a better judge of your own requirements, it becomes your own headache to make a right choice. In order to take a prudent decision, you should be well aware of different term insurance riders in the market along with their respective benefits and additional costs.
What are insurance riders?
Insurance riders are the benefits over and above your life insurance policy. There is no compulsion from insurance companies to choose any rider in addition to your basic policy. People make a purchase of these riders because of their extra benefits. But each additional rider will cost you further in terms of extra premium amount. These riders do not have any sort of impact on your base sum assured and the original rules applicable on your policy.
Types of different insurance riders
A brief description of different insurance riders available in the market is as follows:
1) Accidental Death Rider – In case of death of an insured person due to accident, the rider will provide additional sum assured. The benefit is available only and only if the death has taken place due to accident. However, if the cause of death is other than accident then the insured will get the basic sum assured and the additional benefit will not be provided. For example – if you have taken a basic policy of 30 lakhs sum assured and accidental death rider of 10 lakhs, your legal heirs will get 40 lakhs in case of death due to accident and 30 lakhs in case of death due to other reasons. Many insurance policies provide cover for disabilities arising due to accidents.
2) Permanent and Partial Disability – Not every accident results in death, unfortunately there are chances of getting permanent or temporary disability. If you have taken an additional rider for disability and it happens due to accident then you may get periodical payments from insurance company for next 5 to 10 years at a certain percentage of sum assured.
3) Rider for critical illness – In case you have opted for this rider and at a later stage you are diagnosed with an illness mentioned in the policy, then you will get a lump sum amount from the insurance company. Examples of critical illness are heart attack, kidney failure, cancer, paralysis, etc. once the illness is detected then the policy stands either to continue or to terminate as per the points mentioned in the policy document. A policy document may also specify in advance that if a lump sum amount is paid to you because of critical illness then your insurance coverage may reduce by the same amount.
4) Waiver of Premium – This rider acts like a cover in case you fail to meet your premium payments either due to disability or because of income loss. In such case, your future premiums will be waived off and your policy will still continue to exist as before. If you do not have this rider as add on in your insurance policy and you missed a premium payment on time, then your policy will expire and your legal heirs will lose their right to claim in the event of your demise. In other words, the insurance cover will cease to exist in case of non-payment of premium.
5) Income Benefit Rider – This rider is taken by people who think of making an arrangement of additional income for their legal heirs after their death. With the presence of this rider, legal heirs of policy holder will get additional income for next 5 to 10 years on yearly basis along with the basic sum assured.
I hope by now, you must have taken a decision about which rider to add in your insurance policy. Just because a rider is available, you should not jump to purchase it. Remember, these riders come with additional cost. Think of your requirements and your premium paying capacity, compare the benefits and costs of riders from various insurance companies and accordingly make a choice of riders.