How Riders Add Value to Term Insurance?

Term insurance is one of the key ways to ensure the financial stability of a family. If you are looking for ways to safeguard the financial condition of your loved ones even if you are no longer there to provide, you must consider term insurance by all means. A term insurance plan would provide pure protection to your family members for a specific period of time. One of the major benefits that you would get with your term insurance plan is a death benefit. However, you can also increase your insurance coverage if you feel the need to. How? With the help of a rider or add-on cover. 

Riders or add-on covers in term insurance are optional covers that extend the coverage by a significant amount. In order to avail the rider benefits, the policyholder has to pay an additional premium price over their base policy premium. If interested, the policyholder can purchase the optional rider at the time of policy inception or at the time of policy anniversary, keeping the insurance company terms and conditions in mind. 

How Riders Add Value to Term Insurance?

Term insurance comes with multiple rider options. Some of the key riders available under term insurance are accidental death benefit rider, accidental disability benefit rider, waiver of premium rider, income benefit rider, critical illness rider and more. It must be noted that each rider serves a different purpose and comes with its own benefits. 

Let us shed light on how each rider increases the value of the base term policy one by one.

• Accidental Death Benefit Rider: Accidental Death Benefit Rider: If opted for, the accidental death benefit rider provides an additional sum assured to the beneficiary, in the case of death of the life insured during the policy term. The calculation of the rider sum assured is done on the basis of the original sum assured of the term plan. This rider is only applicable in case of an accident. In case of death of the life assured due to any other reason, the beneficiary only receives the sum assured under the base term policy. 

• Accidental Disability Benefit Rider: If selected, the accidental disability benefit rider covers the insured individual in the event of partial or permanent disability due to an accident. The rider in such a case acts as an income source for the policyholder and their family members as in most cases insurance companies provide a percentage of sum assured for a period of 5 to 10 years after the accident. 

• Critical Illness Rider: If chosen, the critical illness rider protects the policyholder from a series of critical illnesses such as heart attack, cancer, and more that would otherwise require the policyholder to pay a significant amount. This rider provides a lump sum amount in case of diagnosis of a covered critical illness. 

• Accelerated Death Benefit Rider: If purchased, the rider provides the policyholder's family with a part of the sum assured in advance to cover medical expenses if the policyholder gets diagnosed with a terminal illness. The percentage of sum assured paid in advance is preset. Under the rider, the remaining amount is given to the beneficiary following the death of the policyholder.

• Waiver of Premium Rider: If chosen, the rider helps the policyholder if they are unable to pay premiums, either because of disability or income loss. Under the rider, the policy remains active, but the future premiums are waived off. In the absence of this rider, the policy expires. Moreover, the beneficiary is not given any death benefit.

• Income Benefit Rider: True to its name, the rider provides the policyholder with a way to generate income after their death. If this rider is included in the insurance plan, the family of the policyholder receives additional income every year for the next 5 to 10 years after the death of the insured, apart from getting the sum assured in the term plan.

Now that you are aware of the significance of riders in term insurance, go ahead and get the best that suits your needs to a tee.

Also Read: 

Life Insurance Riders Frequently Asked Questions

How To Know Which Rider is Suitable For Myself?

Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to `rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.