Life insurance rider plans can be an addition, change, or endorsement to a life insurance policy that gives the policyholder extra coverage. Riders make a life insurance policy stronger by adding additional benefits on top of the main one, which is a death benefit.
Several life insurance plans come with riders that can be helpful. But the cost depends on the riders, their work, the policy, the premium, and the insurance company. Sometimes riders are included as part of the life insurance plan. Other riders must be purchased separately by paying an additional premium. Check with the insurance agent or advisor when you buy life insurance to see if your policy is eligible for riders. You can also use the life insurance premium calculator to help you figure out all the facts before buying one. Riders are additions to life insurance plans. Therefore, payments toward riders also enjoy tax benefits per the prevailing tax rules. In India, the tax deductions vary depending on the type of life insurance, type of rider, old/new regime and other factors. Here are six essential riders and benefits that come with a life insurance policy.
- Accidental Death Benefit Rider: If the insured passes away in an accident during the policy term, this rider pays an extra sum assured. The percentage of this additional amount is based on the original amount guaranteed. It can be different from one company to the next. Sometimes, there could be a limit on how much this rider can cover. But the cost of this rider stays the same for the whole policy term. A common misconception associated with this rider is that the policyholder can get the sum assured only if the cause of death is an accident and not otherwise. It's not like that. Even if this rider isn't included, the basic amount guaranteed can still be paid. The rider adds an additional sum over the basic assured sum if the policyholder passes away due to an accident.
- Accelerated Death Benefit Rider: When a person has a terminal illness, the person's family spends a lot of money on medical care and other costs. If the patient took out an accelerated death benefit rider, the family might receive a part of the sum assured early. This rider specifies the amount of sum assured that would be payable in advance. The Accelerated Death Benefit Rider can be beneficial and doesn't cost much.
- Accidental Disability Benefit Rider: This rider goes into effect if the policyholder gets into an accident that leaves them partially or permanently disabled. With this rider, many policies may pay a certain percentage of the sum assured to the policyholder every month for five to ten years after an accident makes them disabled. Usually, this rider is added to the Accidental Death rider. It's important to remember that this rider only applies if the disability is caused by accident.
- Critical Illness Benefit Rider: This rider states that the policyholder may get a lump sum if a critical illness listed in the policy is valid. Essential illness coverage can include many significant diseases, such as cancer, heart attack, stroke, paralysis, coronary artery bypass graft surgery, kidney failure, or major organ transplant. After the critical illness has been found, the policy can either continue or end, depending on the terms and conditions of the policy. The amount paid out to the policyholder can sometimes make the coverage less.
- Waiver of Premium Rider: This rider states that the policyholder may not have to pay any more premiums if they lose their job or gets sick and can't work. This rider is like ensuring that all of your premium payments can be covered until the end of the policy. Without the rider, in case the policyholder becomes disabled or faces a loss of income due to which premiums cannot be paid, then the procedure can lapse. There may not be any death benefit payment due to non-payment of premiums.
- Income Benefit Rider: This primarily generates income after the policyholder's death. When this rider is added to the policy, the policyholder's family gets extra money every year for five to ten years in addition to the sum assured.
In conclusion: Before adding riders as extras in your policy, understand the riders in detail. Learn its associated benefits and all inclusions and exclusions. Always compare the costs of different riders, which could be offered by other insurance companies. Most importantly, think about whether or not you really need specific riders. After a thorough analysis, you should decide whether to add them to your policy. Even though we can't stop bad things from happening, we can definitely plan for them. Life insurance rider plans are essential to preparing for the unexpected. You and your family would be better off with them.
