Term Insurance Riders: Features, Types & Benefits

Term insurance purchase is a significant part of one’s financial planning. A must have at every individual, term insurance is of vital importance in ensuring that your loved ones are financially secure when you are not around. While buying term insurance may be sufficient for many, it is always advised to purchase rider plans to enhance the level of protection provided by term plans. Let us find out more about riders. 

What is a Term Insurance Rider?

A term insurance rider is an add-on accessory that can be attached with a term insurance plan to enhance the level of financial security. It is important to choose the right rider so as to make the term insurance plan more effective.

Some of the key features of a rider include:

• The coverage under a rider plan comes into effect on an occurrence of the specific event. 
• Riders provide benefits over and above the basic plan.
• Rider can be added to the term insurance plan when buying the latter or at any renewal.
• One can opt out of a rider at any policy renewal as per their need.
• Adding each rider comes with an additional value that the policyholder has to pay.
• Riders have no maturity value, therefore if a rider has not been utilized during the term of the plan, no benefit would be paid on its maturity.
• Addition of multiple riders to a term insurance plan is allowed. However, the total rider premium should not be more than 30% of the term insurance policy’s base premium.
• Premiums payable for riders are allowed for tax deduction under Section 80C or Section 80D, depending on the rider selected.
• The rider sum assured is, in most cases, equal to the sum assured of the base plan. 

Types of Riders Available with Term Plans

Some of the riders you can buy with term insurance are:

• Accidental Death Rider: If the policyholder dies due to an accident during the policy tenure, family or dependent are paid an additional sum assured for this rider. 
• Accidental Disability Rider: If the policyholder becomes disabled due to an accident, a sum assured against the rider is provided. 
• Critical Illness Rider: If the policyholder is diagnosed with one of the critical illnesses covered in the term policy, they are given the sum assured for the rider.
• Terminal Illness Rider: If the policyholder is suffering from an incurable illness, they are provided sum assured without waiting. 
• Waiver of Premium Rider: If the policyholder (different from the life assured) dies during the term of the plan, then the future premiums are waived off.
• Income Benefit Rider: If the policyholder dies during the policy tenure, the family receives the sum assured as a monthly income for a fixed tenure rather than a lump sum amount. 

What’s the Benefit?

You should buy a rider with your term insurance to make your plan more comprehensive. Do not forget that these riders might turn out to be extremely beneficial when the need arises. While you may not foresee the future, you can definitely prepare yourself as well as your dear ones. Your term insurance rider will give you the chance to do so by providing additional benefits and making your cover more effective at a minimal extra premium price. 

Final Words

Making a choice for a term insurance rider is simple. If you are the sole earning member in your family, choose an income benefit rider to support your family. If your family has a history of critical illness, buying a critical illness rider would be best for you. Similarly, you can also go for waiver of premium rider to keep your term plan going even when you are not in a position to pay premiums. You can also go with the accidental death benefit rider to make sure your family’s needs are met even if an unexpected accident leaves the family devastated. 

Also Read: Money-Back Plan Vs Term Life Insurance

Endowment Plan vs Term Plan - Difference

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.