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How to increase coverage with term and life insurance riders

A life insurance plan is an essential part of financial planning and life planning for everyone. It is essentially meant to protect your family financially in the event of your death. However, life insurance plans also serve a lot of other purposes like tax-saving, accumulation of savings, income after retirement, etc. Moreover, just buying an insurance plan does not protect you from all kinds of risks.

For example, you could meet with an accident, and the resulting injuries, or worse, disability, could affect your ability to work. In the absence of regular earnings, payment of premium becomes difficult with hospital costs. This is where life and term life insurance riders come in.

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What are riders?

Riders are added benefits that help you customize the policy according to your needs. They cost cheaper than your life insurance policy. They provide you with a cover over and above what your policy offers. The usual cost is 5%-10% of base policy. Preferably, you should buy riders at the beginning of the policy. The earlier they are taken, the cheaper they will cost. The amount paid for a rider can't be more than 30% of premium paid on the basic insurance policy.

Types of riders

Critical Illness Rider

This rider provides additional cover if the event of the policyholder being diagnosed with a critical illness. Insurance companies usually have a list of conditions that fall under critical illness. The list could be different for different companies but usually, cancer, heart attack, coronary artery bypass, kidney/renal failure, paralytic stroke, and major organ transplant are covered by all.

The other option for critical illness cover is a separate health insurance plan. However, this would mean two different policies and premiums. A rider would be a more convenient and cheaper option.

Accidental Death Benefit Rider

This is a popular rider. Accidents come with a lot of medical expenses for the family. Hence, an accidental death benefit rider is useful in the case of policyholder's death because of an accident. Nominee already receives the Sum assured upon death of the insured. With an ADB rider, they receive an added amount. For example, if the base term life insurance policy's sum assured is Rs.35 lakhs, and the rider is of Rs.15 lakhs, the nominee receives Rs.50 lakhs.

Accident and Accident Disability Benefit Rider

An ADDB rider offers an extra cover in the event of disability because of an accident. Some insurers offer it for a temporary disability as well. Some even offer waiver of premium as the policyholder might not have a proper income due to disability and paying premiums becomes difficult. If this benefit is not available, you can even go for a separate waiver of premium rider.

Waiver of Premium (WOP) Rider

If an accident renders the life insurance policyholder permanently disabled, this rider becomes active and all premiums thereafter are waived. The policy still continues, providing the policyholder with protection for life. Some WOP riders also cover critical illnesses such as open-chest CABG, cancer, stroke, and first heart attack.

Accelerated Death Benefit Rider

This is useful in case of the policyholder contracting a terminal illness that reduces their lifespan. In such cases, the rider increases death benefit by some percentage for the nominee.

Income Rider

In case of death of the policyholder, their family receives a monthly income for a specified number of years. This duration should be decided while opting for the rider. This is a very useful rider as it secures the family for the long term and helps them pay for regular expenses.

iSelect Term Plan

If you are looking for a term life insurance policy with death and terminal illness cover along with multiple rider options, the iSelect Term Plan from Canara HSBC might be just the right choice for you. It provides life cover upto the age of 80 with options like spouse cover, cover against accidental death/ disability, and the option to secure a regular income for your family after you are no more. You also have the option of increasing life cover by 25% every five years. If availed, you can increase your cover by upto 100% during your policy term.

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