Term insurance plans are mainly intended to cover the risk of a sudden death. The plan often acts as an income replacement tool to the insurer’s family after his/her death. However, this doesn’t assure getting the maximum benefits of your term plan especially with the basic traditional plans that which come without any extra benefits or privileges.
Also, given the uncertainties and unforeseen oppressions in life, there is no guarantee that the insurer may not face any life-threatening situation even when he/she is alive. What if a term insurance policyholder may become disabled due to an accident? Or gets diagnosed with some sort of critical illness like cancer? Or suffer a major loss that has an impact over his/her earning capacity?
In such a situation forget taking the maximum advantage of the term plan, the insurer might even fail to make timely premium payments some times. Besides, he/she would be also surrounded by hospital-related expenses and invoking the base policy may not be acceptable. This is where term insurance riders come into play.
Let’s see what are ‘Term Insurance Riders’ and what are the types
Riders are amendments that provide additional benefits in a life insurance policy to supplement the coverage of the policy. They are totally optional and they may or may not be attached to the primary term insurance plan. When attached thee ‘riders’ provide a financial cover over and above the basic sum assured. They help in customizing the life insurance policy according to one’s anticipated future needs.
Here are few common riders that are available with all the insurance providers:
- Critical Illness
- Accidental Death Benefit Rider
- Partial or Permanent Disability due to Accident Benefit Rider
- Income Benefit on Accidental Disability Rider
- Waiver of Premium Rider
However, depending upon the riders that you chose the cost of the policy may increase. Out of all the riders, Critical Illness is the most expensive one and adding it can increase the premium by 15 per cent.
Here are Certain Conditions Relating to Term Insurance Riders
- All the ‘terms and conditions’ relating to the term of the rider will also be dependent on the ‘terms and conditions’ of the primary policy it is attached to.
- As directed by IRDAI, the total ‘rider premium’ when put together cannot surpass 30% of the primary plan premium. Under health riders, the term plan premium cannot exceed 100% of the primary plan premium.
- The term of the rider cannot be more than the term of the primary policy. Even the ‘sum assured’ of the term insurance rider cannot be more than the’ sum assured’ of the primary policy.
- The rider benefits will stop when the insurer achieves the age of 65 or on the maturity of the term policy, whichever is earlier.
- Some policy allows you to add term insurance riders only at the beginning while a few others may allow you to add these riders during the policy anniversary.
- Some of the riders may only be ‘offered’ with online insurance plans.
- A term insurance policy may not permit adding all the riders
For those who want to cover risks with a single
insurer at one place, adding a rider helps you to customize your term insurance
plans. However, before you attach riders in your plan you need to evaluate the
need for each of the rider.