8 Life Insurance Riders You Should Consider Buying

As life expectancy trends shift, the need for comprehensive protection increases. Term insurance, a type of life insurance, emerges as a fundamental solution, offering affordable premiums and invaluable peace of mind to policyholders and their beneficiaries. However, to fortify these foundational plans, insurance riders become indispensable.

Life insurance riders extend the scope of coverage, addressing specific needs and potential risks that may not be adequately mitigated by standard policies alone. These supplementary provisions offer tailored solutions, enhancing the resilience of your financial strategy.

This article elucidates 8 essential life insurance riders that can extend your coverage, ensuring comprehensive protection and greater peace of mind for you and your loved ones.

What Are Life Insurance Riders?

The life insurance riders are additional perks accessible through a slightly elevated premium. You have the flexibility to tailor your fundamental life insurance policy by incorporating specific riders according to your needs.

Before buying riders with your base plan, it is crucial to assess your lifestyle and anticipate potential future risks. This understanding guides your rider selection process effectively.

While opting for a policy full of several riders might seem convenient, it often results in inflated premiums for features that may not be necessary. Riders offer the opportunity to customise your policy to align precisely with your requirements. So, the premium increases only in accordance with the riders you choose to pay for. Thus, the selection of appropriate riders is equally essential when purchasing a policy.

Here Are the Key Benefits of Availing of Life Insurance Riders:

1. Term insurance riders offer extensive protection tailored to the areas of heightened risk identified based on your lifestyle.

2. Despite delivering maximum value to your base plan, riders remain accessible at a reasonable premium.

3. Buying health-related riders, such as Critical Illness Cover, ensures eligibility for the same tax benefits as your base plan under Section 80D of the Income Tax Act. Similarly, for income-related riders like Daily Hospital Cash, tax benefits are applicable under Section 80C of the Income Tax Act.

4. Riders complement the primary life insurance coverage. Opting for separate accidental and critical insurance policies would result in higher premiums and the management of multiple policies. Additionally, the consolidation of benefits would not be possible with separate covers.

Here Are the 8 Types of Life Insurance Riders You Should Consider Buying:

1. Guaranteed Insurability Rider:

Life insurance needs to evolve with significant life events that require increased coverage. However, increasing age often brings heightened health risks, necessitating medical assessments for coverage adjustments, resulting in higher premiums.

The Guaranteed Insurability Rider streamlines the process by facilitating increased coverage without mandatory medical evaluations, provided income and other criteria are met. Moreover, the rider typically extends the age limit for renewal, ensuring policy continuity without medical scrutiny.

2. Accidental Death Benefit Rider:

While most life insurance policies inherently include coverage for accidental death, insurers commonly offer an additional rider for accidental death, known as the Accidental Death Benefit. This rider supplements the base plan by providing an extra sum assured in the event of accidental death, typically at a modest increase in premium. The designated nominee receives this sum assured upon the policyholder's demise resulting from any accident.

Accidental fatalities inflict emotional and financial strain on families, particularly in regions with high accident rates. In India, where road accident fatalities rank highest globally, such coverage is particularly advised for residents of accident-prone areas or frequent travellers. Additionally, individuals working in hazardous conditions stand to benefit from the Accidental Death Benefit cover.

3. Waiver of Premium Rider:

Even during a life insurance policy's grace period, defaulting on premium payments can lead to policy lapse, rendering the insured ineligible for benefits. Moreover, if you are the sole breadwinner of your family, the financial burden on your family is likely to increase.

The Waiver of Premium Rider becomes crucial in cases of permanent disability leading to loss of income. Under this rider, all future premiums are waived until the insured is capable of paying again. Despite the premium waiver during this period, full life insurance coverage remains intact for the policy term.

It is worth noting that some health insurance providers extend this rider to address financial constraints arising from various factors, not limited to permanent disability.

4. Critical Illness Rider:

The incidence of critical illnesses continues to rise, often resulting in substantial out-of-pocket expenses for treatment. While some health insurance policies cover certain critical illnesses, many are excluded, leaving individuals vulnerable.

Families with a medical history of critical illness can benefit from the Critical Illness Rider, which offers coverage for a wide range of critical illnesses not typically included in base policies. However, reviewing the list of covered illnesses specific to each insurer before purchasing the rider is essential, as coverage may vary among insurers.

Given the life-threatening nature of critical illnesses and their associated costs, buying this rider can prove to be a prudent and affordable means of safeguarding one's savings.

5. Accidental Disability Rider:

Accidents can result in permanent or partial disability, leading to income loss and significant financial strain due to medical expenses and daily needs.

The Accidental Disability Rider alleviates this burden by either waiving future premiums or providing a lump sum rider sum assured. Prospective buyers should carefully review rider specifics before purchase, as coverage may vary from insurer to insurer.

6. Return of Premium Rider:

Individuals seeking a tangible return on their premium payments often opt for money-back policies over traditional term plans. The Return of Premium Rider caters to this preference by reimbursing the total premiums paid towards term insurance, minus taxes, upon policy maturity.

7. Long-term Care Rider:

In case the insured requires care at a nursing home or in-home assistance, this rider provides monthly payments to cover such expenses. While long-term care insurance can be bought as a standalone policy, insurance providers also offer riders specifically designed to address long-term care costs.

8. Family Income Benefit Rider:

The primary objective of any life insurance plan is to ensure financial security for one's family in the event of the insured's demise. The Family Income Benefit Rider facilitates this goal by providing a steady income stream to the family beneficiaries. Insurers typically offer various options, allowing policyholders to select either a monthly or yearly income, with or without an additional sum assured.

To conclude:

While many insurers offer standardised insurance policies without the option for customisation, riders serve as a means to tailor coverage according to individual requirements. It is crucial to thoroughly review the terms and conditions before adding a rider to a life insurance policy.

Though we can't foresee the future, assessing potential risk factors and selecting the most appropriate riders to complement your basic life insurance policy is prudent. If necessary, consult with an insurance advisor to assess the benefits of various riders and select the one that aligns best with your needs and those of your family.

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KETKI JADHAV is a Content Writer at PersonalFN since August 2021. She is an MBA (Finance) and has over seven years of experience in Retail Banking. Ketki specialises in covering articles around banking, insurance, personal finance, and mutual funds and has been doing it for over three years now.

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This article is for information purposes only and is not meant to influence your investment decisions. It should not be treated as a mutual fund recommendation or advice to make an investment decision in the above-mentioned schemes.