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How to increase coverage with term and life insurance riders

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 Oriental Bank of Commerce 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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Frequently Asked Questions (FAQs) for Term Insurance Plans

A person can only purchase a term insurance plan till the age of 65 years, and they can choose the risk coverage for up to 99 years of age. One can easily buy the best online term plan between the age of 18 to 65 years.

This being a term insurance plan doesn't offer any payout after maturity or expiration date

Each insurance company has its own term insurance premium calculator. If you want to check out the premium quote, go for the iSelect Star term plan calculator. It gives a premium amount based on your age, gender, habits, education, and annual income.

You can purchase an iSelect Star term plan anytime between 18 to 65 years of age. This is a term plan with return of premium option – that means all the premiums paid throughout the tenure will be paid back to you if you outlive the policy.

It depends on your needs. For example, if you want to cover a child's education or wedding expenses, you have to include them in your coverage. Your premium will be calculated accordingly when you buy the best term plan in India.

If your key purpose is to give your Family financial protection, go for the best term insurance plan. And if you want some savings, in the end, go for a traditional life insurance plan. iSelect Star is a term plan with return of premium option. All the term insurance premium will be paid back to you, if you outlive the policy term.

Go for at least 12 times cover than your annual income. Or you can go as far as 20 times coverage as per your needs.

The right time is when you don't have anything to keep your Family safe from financial storms, and they rely on you for financial needs.

If you are unable to make the payment or suffering from a terminal illness, the best term insurance plan pays a part of the sum insured to treat your disease.

Term life insurance plan riders are attachment or endorsements made, while taking the term insurance policy, as a supplementary coverage to policyholders. Apart from the core death benefit, term insurance plan riders offer below-given additional benefits:

  • Accidental Death Rider When a person suffers from a terminal illness, his/her family ends up spending a significant amount in treatment and medical expenses. Accelerated death rider pays a part of the sum insured in advance to cover such costs and save the family from running out of cash.
  • Accidental Disability Rider If the policyholder can't pay the premium because of an accident or permanent disability, a sudden disability this pays the premium on behalf of the policyholder till completion of policy term or for a defined duration.
  • Critical Illness Rider If the insured person gets a heart attack, cancer, or any other critical illness, this rider pays a lump sum on valid diagnosis.
  • Premium Waiver Rider If the policyholder is unable to make payments due to income loss or disability, a premium waiver rider waives off all future premium payments. And the term insurance policy remains active until the expiration date.
  • Income Rider: This rider in a term insurance plan ensures that your family receives regular income + sum insured in case of unfortunate demise of life insured.

Anyone can go for life insurance as it offers some savings after the maturity date, but it doesn't cover the protection of your family . The best term insurance plan is solely designed for taking care of loved ones if something happens to you. Term insurance plans act as a shield between your family and sudden financial fall. They make sure that your family lives a healthy life even after you. With a little amount paid per year, you can be worry-free from the family's financial conditions.

Questions that you need to ask while Buying the Best Term Insurance Plan?

  1. 1. Are you buying a term plan with return of premium?
  2. 2. Amount of premium you have to pay based on your age, habits, education, and monthly income
  3. 3. The total number of benefits covered in the term insurance plan. Do they include benefits that you care about the most?
  4. 4. How to save money on tax if you pay for the term life insurance plan?
  5. 5. Do they offer regular income options?
  6. 6. Can you change the coverage and premium in the future?
  7. 7. Does the claim consider valid if death occurs outside India?
  8. 8. Which kind of death is not covered by a term insurance plan?
  9. 9. Can NRIs take a term insurance plan? If yes, what are the conditions?
  10. 10. Does the term insurance plan have a cash value if you decide to cancel the term insurance policy?
  11. 11. Under what circumstances can a term insurance plan be cancelled?
  12. 12. Can I pay the premiums online or make electronic payments?
  13. 13. What will happen to the term life insurance plan if the life assured starts smoking after purchasing the policy?
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