While term insurance, such as LIC term insurance and HDFC term insurance, continues to be popular among the bourgeois society, most people tend to compromise with the aspect of term riders. In fact, people are rather unaware of the benefits of riders which are meant exclusively to widen the scope of coverage. What is more, riders also act as a significant shield against tentative risks not covered by the chief insurance policy.
Of course, buying a rider automatically means the payment of additional premium. However, it is a sensible wager, given the fact that the main policy does not come into the scene in certain critical conditions. There are different kinds of riders provided by insurance companies. Of these, the most elementary ones include critical illness rider, accidental death benefit rider and permanent disability rider.
The prospective policyholder needs to bear it in mind that the total sum of the premium gathered under the different riders should not exceed thirty per cent of the basic premium for the central life insurance plan. Also, before choosing the extent and type of rider, one should make it a point to comprehend the terms of the rider and particularly its attendant limitations. It is important to note that no riders are provided by insurance companies after the culmination of sixty five years of age.
So what exactly are the types and benefits of buying riders while securing a term insurance plan?
Accidental Death Benefit Rider
- As mentioned at the outset, a term insurance rider is essentially meant to widen the horizon of coverage. Similarly, the accidental death benefit rider is designed to furnish an additional sum assured to the concerned nominee upon the decease of the concerned insured.
- While the amount of the additional sum may vary from one company to another, the scope of the rider remains the same.
- Most companies tend to cap the maximum sum assured. However, almost all the companies insist on an unaltered premium amount through the term of the concerned policy.
- It is important to keep in mind that the rider acts separately from the central insurance policy. While the main policy will still dispense the basic sum assured, the rider will also help with its own contribution.
- What is more, the accidental death benefit rider is the cheapest rider available. Generally speaking, it is favored by the likes of those who are in some or another involved in dangerous working conditions.
Accelerated Death Benefit Rider
- At times the concerned policyholder might be from a terminal illness in which case the expenses incurred are fundamentally cumbersome for the family. In such cases, the accelerated death benefit rider is of enormous help.
- Essentially, the rider is meant to cover the extra expenses incurred during the course of the illness. The extra costs might include the patient’s medication, hospitalization and other expert consultation costs.
- Chiefly, the accelerated death benefit rider shells out the proposed sum assured to the family in advance to facilitate coverage. Additionally, the biggest advantage of the rider is that it comes at a viable cost and is especially useful in critical times. Again, the rider acts separately from the main insurance policy.
Accidental Disability Benefit Rider
- Yet another substantial rider is the disability rider. Having clinched this rider, the concerned insurance is duty bound to shell out the proposed sum assured on a regular basis for the succeeding five to ten years.
- Generally speaking, a majority of insurance companies today do not treat the disability rider as a separate domain. Instead, it is clubbed with the accidental death benefit rider.
- Before buying the disability benefit rider, it is important for the policyholder to thoroughly read the precise terms and conditions laid down in the policy document.
- Specifically speaking, the rider is available only if the disability is incurred in the occasion of an accident. Disability due to any other reason is not covered under this rider.
Critical Illness Benefit Rider
- All the major insurance policies, such as HDFC term insurance, have the critical illness benefit rider. It is one of the most significant riders of a term insurance scheme.
- According to the general terms of the rider, the concerned policyholder is entitled to receiving a particular amount of sum assured upon the diagnosis of a critical ailment such as cancer, stroke, heart attack, renal complications, organ transplant etc.
- Before clinching the rider, the concerned policyholder should read the policy terms and conditions, especially the diseases covered. Also, it is vital to note that there are many term insurance policies which shell out the rider benefits only till the detection of the illness. The policy may terminate the benefits post identification.
- At other times, it is equally crucial to keep in mind that there might be a discrepancy between the policy coverage and the particular amount shelled out to the insured due to the rider aspect.
- Yet another vital rider provided by insurance companies is the premium waiver rider. As the name suggests, it is essentially meant to help the concerned insured in case he or she fails to shell out premiums, by waiving off the future premiums to a considerable extent.
- The most appealing aspect of the plan is that the policy continues to operate despite the inability of the policyholder to pay the premiums. Without this rider, it is only natural that the plan should be terminated upon failing to disburse the required premiums in due time.
- At the same time, the concerned policyholder should also be prudent enough to read up the terms and conditions. The subtleties tend to vary widely from one insurance company to another.
Term insurance riders are designed exclusively to widen the scope of benefits already provided to the insured by the basic policy. In a way it may be said that the riders help one cover the limitations of the central insurance scheme in more ways than one. Therefore, one should always prefer insurance riders. However, the most important thing to keep in mind is the terms and conditions.