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Importance of Riders in Term Plans - Choose Wisely

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Importance of Riders in Term Plans
May 13, 2019

A traditional life insurance policy forms a basic hedge between the financial insecurities and your family’s future. In an uncertain life, where as a breadwinner for your family, you may feel stressed about the future of your loved ones in your absence, a life insurance policy seeks to act as a guarantee for their benefit. A traditional life insurance policy is the one that offers guaranteed benefits in the shape of sum assured i.e. death benefit to the nominee(s) of the policy holder, in the event of the policy holder’s demise during policy term. Although a standard term insurance policy does not entitle the policy holder to receive any maturity benefits i.e. financial benefits in case she/he survives the policy term, yet there are other forms of life insurance that provide such benefits. One critical aspect of the policies being offered by various insurance providers today is the option of choosing riders.

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Riders are additional benefits that are provided by the insurance provider, in addition to the main plan benefits. There are various riders that come with different features and vary from one plan to the other. In a term insurance plan riders offer various benefits and as such, must be chosen carefully and after due comparison.

Following are the various benefits offered by the optional riders that must be considered before opting for them:

  1. Riders are extensive benefits that may negate the requirement of choosing any separate policy. This, in essence, means that when you choose a rider, you may get the benefits that were lacking in the main plan. Therefore, there is no need of buying any additional policy for a particular requisite benefit.
  2. The scope of coverage that gets extended by having a rider actually impacts the overall cost-effectiveness of the entire plan. This is because when, instead of buying a new policy, you purchase a rider, the overall money that you invest in a plan proves to be economical in the long run. As such, having a rider is an additional benefit that must be seen in its entire perspective, depending on your specific needs and requirements.
  3. Having riders is also subject to tax benefits because the extra premiums paid for the additional riders are subject to tax exemption under Section 80C of the Income Tax Act, 1961.
  4. Besides taxation, riders actually help you implement your financial plans in a better manner. The money that you save on the overall benefit can be tied up as investment in a different mode altogether. All this is actually very helpful for the overall financial planning.

Therefore, it must be said that although having riders may prove to be beneficial in the long run, yet it must be kept in mind that riders must be chosen carefully after suitably matching your specific needs and requirements.

HDFC Life offers Click 2 Protect Life – an online term insurance plan that offers guaranteed financial protection against the unforeseen maladies like death, disease and disabilities. It seeks to protect your family’s financial needs, even in your absence.

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Francis Rodrigues Francis Rodrigues

Francis Rodrigues has a decade long experience in the insurance sector, and as SVP, E-Commerce and Digital Marketing, HDFC Life, manages the online sales channel, as well as digital and performance marketing. He has had hands-on experience in setting up sales channels and functional teams from scratch over a career spanning 2 decades.

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Vishal Subharwal Vishal Subharwal

Vishal Subharwal heads the Strategy, Marketing, E-Commerce, Digital Business & Sustainability initiatives at HDFC Life. He is responsible for crafting and ensuring successful implementation of the overall organisation strategy.

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