Riders are important part of life insurance policy. Policy rider allows modification in an existing insurance policy to provide an additional coverage. In most cases it has been seen that riders provide additional protection against risk. In simpler terms rider is an added benefit which you can opt for long with policy with greater benefits. Let’s take a look at common types of riders.
Factors of riders
It is important to note that rider come at cheaper cost than basic policy. Usually they cost 5% to 10% of basic policy. So we advise you to opt for rider at beginning of policy. Insurance companies do not check on number of riders which you can opt for. Read our article Senior Citizen must buy mediclaim to cover health issues
However, it has been specified by Insurance Regulator that premium which you pay on rider cannot exceed 30% of premium which you pay for base insurance policy. If possible choice of rider should depend on your needs. Life insurance is must if you have dependents like children, old parents and liabilities like home loans or EMIs. And pure term policy will create safety cover for your family in case of an untimely death of policyholder
So your family members do not have to face financial burden. However, you must buy extra benefits called riders along with plan for an individual. So different insurance companies offer different riders and feature with plan and some of common riders that are available in market with term plan are given below.
Types of Rider
Waiver of Premium Rider (WOP)
To handle emergency situations insurance companies provide waiver of premium rider for policy holders. It is an excellent rider which safeguards the policy holder. This rider will waive off future premiums if you unable to make payments due to income loses or becomes permanently disabled. In this case the premiums will be waived but cover will continue.
For 30 years old non-smoker male get WOP rider with cost between INR 31 to INR 49 per month as an additional charge with premium. These charges will be different as per age profiles. Also Read ‘Must-Know’ Differences between Tax-Deductions on Life and Health Insurance Premiums.
Critical illness Rider Benefit
It is another useful rider which takes care of your medical expenses in case of critical disease. Hence, this critical illness rider will act as an income replacement and you can use this amount for expenditure. In most cases, extra cover is equal to sum assured on base policy and is paid on diagnosis of illness.
Before you sign on, check list of illnesses covered and exclusions. Also, few insurers cancel base policy once claim is made on rider. This critical illness list is available with insurance companies and nominee is paid an additional sum assured over and above base policy. This rider cost will be in small addition to your regular pure term premium. But it will cover you against critical disease mentioned in policy document.
So each insurer has different number of diseases listed under this rider. However, buying this rider with plan is easy way of protecting yourself against major life-threatening diseases. Like cancer, tumor, heart attack, kidney disorders, coma and other diseases specified in policy.
Accidental Death Rider (ADB)
It is most common riders if you die in an accident during term of life insurance policy. Moreover, nominee will be paid an additional amount equal to or less than sum assured. You must keep in mind, all term plans cover accidental death under policy, but this rider is provided as an add-on to policy.
If you die due to an accident insurance company will pay to nominee total rider sum assured plus death benefit. When it comes to rider sum assured different insurance companies have different policies. In this case this rider cost can vary from company to company.
In case of death due to an accident, rider sum assured of Accidental Death Benefit Rider is payable in addition to normal death benefit. So, if sum assured is Rs 25 lakh and you has attached an ADB rider of Rs 10 lakh, and then total claim amount will be Rs. 35 lakh, if death occurs due to accident. It is necessary to note that insurance company will deduct amount plus interest from what you will receive on your death due to illness.
Accidental Partial and permanent disability rider
Accidents are not always in death but may leave you disables. This rider provides claim in case of death and disability due to an accident. In case of an accident, when you are unable to restore normal life due to any kind of Partial and permanent disability then insurance company will pay lump sum amount. In some cases, premiums are waived off by insurer and sum assured rider is paid to policyholder.
Different types of riders with term insurance will not only take care of your family after your death, but also ensure that if you go through any kind of physical disability due to an accident this rider sum assured will keep you safe in difficult times. Must Read Life Insurance or Health Insurance! Which one you should Opt for?
Income benefit rider
It offers regular source of income to family in case of death or disability of policyholder. You may also like to read Important Term Insurance Riders and Their Benefits. Also read Do not make mistakes while buying medical insurance