Buying a term plan with riders may benefit you in the long run. Many insurance companies provide various term insurance riders with their plans. These optional in-built covers are not required by everyone. Hence, add riders to your term plan after carefully evaluating your financial goals.
Let us understand in detail about these optional and additional in-built covers available with a term insurance plan that allows you to enhance your existing plan.
What is a Rider in a Term Insurance?
Term insurance riders are optional in-built covers that offer additional coverage to the policyholder. These are charged separately and the premiums of the term plan may increase after riders are added to the plan.
Choose riders that align with your financial goals. If you add all the available optional covers to your plan, it may not be beneficial for you.
Types of Riders Available in a Term Insurance Plan and How do they Work?
Accidental Death Benefit
If you pass away during the policy term because of an accident, this rider pays additional sum assured to the beneficiary. It is calculated on the original sum assured. The percentage of the additional benefit might vary from one insurance company to the other. There could be a cap on the maximum sum assured on the accidental death rider. It is applicable only in the case of an accident, and if the insured passes away due to any other reason, the beneficiary will receive the original sum assured.
Accidental Disability Benefit Rider
The accidental disability benefit helps if you become partially or permanently disabled in an accident. Most policies pay a percentage of the sum assured for five to ten years following the accident. There are different types of disabilities, and depending on whether you have permanent or temporary disability, the benefit of this rider will come into force. It can also be considered as a rider that helps you get additional income when you are unable to work or function properly.
Critical Illness Rider
It can help if you are diagnosed with any life-threatening disease such as cancer, heart attack, kidney failure and paralysis (to name a few), which would otherwise require individuals to spend a lot in treatment. Critical illness benefit provides you with a lump sum amount if you are diagnosed with an illness, which is pre-specified in the policy.
iSelect Smart360 Term Plan is offers coverage against 40 listed critical illnesses.
Income Benefit Rider
It is designed to generate income after the death of the policyholder. With the inclusion of this rider in your term insurance plan, a certain percentage of the sum assured is given to the beneficiaries for the next five to ten years after you pass away.
Terminal Illness Benefit Rider
If you opt for this rider, and you get diagnosed with a terminal illness, it will offer your beneficiaries to get a part of the sum assured in advance. The advance payout can be used for the treatment and costs. The remaining amount will be given to the beneficiary if something happens to you.
Waiver of Premium Rider
It helps when you are no longer able to pay premiums, either due to disability or loss of life or income. With this rider, the policy remains active while the future premiums are waived off. It can be helpful if you have kids as the policy will continue to be in-force and your kid will have an advantage of the policy benefits.
Learn more about - Waiver of Premium Benefit.
Who Should Opt for a Rider while Buying a Term Insurance Plan?
Anyone who needs to upgrade their base term plan can add riders to it. Depending on your financial goals, you should assess the type of riders that will benefit you in the long run.
|Type of Rider||Who should Opt for it?|
|Accidental Death Benefit||Individuals who travel frequently or who work in manufacturing industry, construction sites, mining sites – anything that has a risk associated to their lives.|
|Accidental Disability Benefit||Individuals who commute daily, travel frequently should opt for this rider. It can also be beneficial for those who work in manufacturing industry, construction and mining sites.|
|Critical Illness Benefit||Individuals who consume alcohol, tobacco regularly. Or people with a medical history of illnesses such as diabetes, and blood pressure should opt for this rider.|
|Income Benefit||If you have dependents, this rider is helpful as it provides an income (either in lump sum or monthly payouts) to assist your family during contingencies.|
|Terminal Illness||Any individual who is diagnosed with life threatening disease.|
|Waiver of Premium||Individuals with kids and dependents should opt for this rider.|
Assess your goals and evaluate the plan that you are buying. Add riders to your term insurance plan only if they align with your goals.
FAQs related to Term Insurance Riders
Critical illness rider covers specified illnesses in the term plan. The number and type of illnesses depends on the insurer and the term plan you have chosen.
Anyone who has a term insurance plan can opt for additional in-built covers, otherwise known as riders.