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Things to Know About Term Insurance Riders

Things to Know About Term Insurance Riders

Term insurance riders

Life Insurance is a practical financial tool that acts as a hedge against uncertainties of life, providing cover for our family to face life’s unseen circumstances. An insurance policy is a guarantee for the future that serves to protect our family’s interests in the event of any contingency, when we may not be around to support them. A traditional life insurance plan entitles the nominee of the policy holder to receive a death benefit from the plan i.e. they receive a sum assured in the event of the policy holder’s demise during the term of the plan. In addition, if the policy holder survives the policy term, there are accrued maturity benefits that are payable to the policy holder. However, not all plans offer the same benefits and need additional top-ups. Several term plans are made to offer life cover for a nominal charge, excluding any maturity benefits. This is where, insurance riders come into play.

Term Insurance riders are add-ons or additional benefits which can be opted for along with our basic term plan policy cover at an additional, yet affordable rate. Riders are important in some cases and act as valuable tools that can help expand our life insurance coverage comprehensively.

Why do you require riders in your Term Plan?

At some point in life, we wish we had more perks over and above our basic plans. When it comes to term insurance, riders can make this wish come true by upgrading a basic term insurance plan with additional privileges. Just that we may have to shed a few extra bucks, but that is totally worth it. Therefore, riders provide extra insurance cover or additional benefit on payment of additional premium without having to take a separate policy. Generally, riders have to be chosen and opted for at the time of buying the basic term policy. But some insurers may allow adding riders at a later stage, if stated explicitly in the policy document.

Types of insurance riders

When do riders get terminated?

With most policies, the riders attached get terminated automatically with the discontinuance of the basic policy. At other times, it may get terminated in case its benefit gets paid due to the occurrence of an event, for instance, an accidental benefit rider. You may also be eligible to discontinue a part of your policy and get out of the rider coverage, depending upon the rider terms you agreed on with your insurance provider. In such a case, the future premiums payable will simply be equal to the basic premium of the policy, minus the rider portion opted out for.

Are there tax benefits under riders?

At present, the tax benefits on premium are paid towards a life insurance policy as a whole, including the premium on riders. Premium paid towards all riders, except for health and critical illness, gets tax benefits under Section 80C of the Income Tax Act, 1961. In case of Health and critical illness riders, the tax is levied under Section 80D. All rider benefits, when claimed are exempted from tax, as per Section 10(D) of the Income Tax Act. However, tax laws are subject to change from time to time and are applicable as per laws prevailing at the time of receiving of the service by an insurance company.

With specific riders, you can be assured of boosting your term insurance plan.

You can choose a waiver of premium rider if you are looking for reduction in the number of premiums you pay due to an accidental disability. The permanent disability and accidental death riders help ensure that your family doesn’t go into deep financial crisis in case the unfortunate happens, while the critical illness rider can reduce your family’s financial burden if you develop a terminal illness during the policy term. Lastly, the spouse insurance rider can ensure full security for you future generations in case one of the two parents face the uncertain. Whichever rider you select, do not forget to understand the exclusions and inclusions before opting for one. Why compromise with your loved ones when you can easily get a more comprehensive and broader coverage term plan?

Speak to an insurance specialist now!

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