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Term Insurance Riders

If you want to customise your insurance plan in order to meet your specific needs, you need to consider term insurance riders. These are optional add-ons that boost your basic term insurance coverage by offering extra protection. ...Read More

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TERM INSURANCE PLANS BUYING GUIDE

Term Insurance Riders: Meaning & Benefits

Term Insurance Riders
December 19, 2024

Table of Content

 

What are Riders in Term Insurance?

Riders in term insurance are additional benefits that you can attach to your base insurance policy. With these add-ons, it is possible for the insured to get the scope of their coverage extended. This helps to perfectly meet their financial security needs regarding a specific concern. 

Common riders include critical illness cover, waiver of premium, and accidental death benefit. Each is designed to provide financial support to the insured and their family during uncertain times. 

Why are Riders Important in Term Insurance?

It is important to have term life insurance riders in your policy because they help you significantly increase financial security for family and self. Riders offer targeted, cost-effective protection for situations not typically covered under standard policies. These include critical illness, disability, or accidental death. 

For example, if a critical illness rider is added to life insurance plans, this simple move can help cover significant medical expenses. In contrast, a waiver of premium rider ensures your policy remains active even if you are unable to pay due to unforeseen circumstances. With term insurance with riders, you get a customised solution that safeguards your family and also offers you peace of mind. 

Different Types Of Term Insurance Riders

By opting for term insurance with riders, the insured can avail of several optional add-on benefits. These are a good way to increase the protection you get from your policy. The term insurance add-ons also lend a comprehensive and ensure you get a robust financial security for your family. 

Let us explore the most common types of term insurance riders available:

  • Accidental Death Benefit:

The accidental death benefit rider offers additional payout in case the policyholder passes away in an accident. It creates additonal financial support for the family of the deceased to help deal with the financial setback caused by their loss. 

  • Permanent and Partial Disability Benefits:

When someone is involved in an accident that leads to disability, it can greatly affect their earning potential. The permanent or partial disability rider, often selected by those in hazardous jobs, offers financial compensation in such scenarios. It, therefore, helps you maintain stability during challenging times.

  • Critical Illness Benefit:

The critical illness rider comes in handy in cases where the insured is diagnosed with a critical illness like cancer or heart disease. The payout in lump sum can be used towards the treatment and manage any setback to the income caused by the illness, so that the insured can focus on recovery.

  • Waiver of Premium:

This rider ensures that you can enjoy uninterrupted coverage from your policy even if you are unable to pay the premiums. Such a scenario could develop due to an ongoing illness, injury, or disability, among other reasons. The waiver of premium rider buys you time to get things back on track while still being covered. 

  • Income Benefit:

The income benefit rider is designed to offer family protection and financial security in situations leading to loss of income due to the death of the insured. This benefit is in the form of regular income for a specified period besides the sum assured. It is a helpful option for families where the insured is the sole breadwinner. 

  • Terminal Illness Rider:

If you have invested in a terminal illness rider, you will be given an advance payout in case you are diagnosed with a terminal illness. This rider is suitable for those who have a family history of terminal illnesses. It helps cover treatment costs and manage other financial needs during such a critical phase.

Advantages of Term Insurance Riders

There are many advantages of term insurance riders. They offer versatility and easy customisation of your policy so that it meets your needs well. This way term insurance with riders, gives you protection beyond the basic coverage.  

Let us explore the many advantages of term insurance riders:

  • Better Coverage:

With optional add-on benefits, you can ensure that your policy covers an array of risks. Some of these include the risk of critical illness, accidental death, permanent disability and others. Riders create a net of financial safety for the insured and their families. 

  • Customisation:

With term insurance add-ons, you can personalise your policy based on your life stage and priorities. Whether you are going for a waiver of premium rider or it is a critical health condition you are boosting coverage for, riders bring flexibility. They make it super easy to make sure your coverage is aligned well to your financial needs. 

  • Affordable:

Despite the enhanced benefits, term insurance with riders remains cost-effective in all regards. That is because you can add riders to your policy with just a nominal increase in your premium. This makes them budget-friendly for most who want to secure themselves financially.

  • Complete Protection

By purchasing add-on benefits for your policy, you can get yourself a well-rounded insurance plan that addresses unforeseen events. This helps to ensure that, irrespective of your circumstances, your loved ones will remain financially secure.

  • Adaptability

Life is unpredictable and needs to keep changing from time to time. We prioritise them based on what is important at that point in our lives. Keeping this in mind, term insurance riders are designed to allow you to adjust your coverage as your responsibilities evolve. This makes it very easy to adapt your policy to your changing circumstances.

  • Peace of Mind:

Once you have covered most contingencies with term insurance add-ons, it is only natural to feel at peace. It helps reduce the stress of financial uncertainties, letting you focus on living life to the fullest.

By choosing term insurance with riders, you optimise your policy for comprehensive protection, affordability, and flexibility—all key factors in achieving long-term financial security.

Is It A Good Idea To Buy Riders With Term Insurance?

Riders are additional benefits through which you can boost your term insurance coverage. It is certainly a wise choice to top-up your cover with appropriate riders, be it accidental death, waiver of premium or critical illness. Adding riders is a good idea as it provides customised coverage without needing separate policies. 

However, before you invest in riders, you must evaluate their cost and relevance to your lifestyle. Make sure that the riders you are choosing complement your primary term plan to ensure optimal financial protection.

Why You Should Consider Buying Term Insurance Riders

If you are someone who is worried that your term insurance alone will not be sufficient to meet your future financial needs, you should consider boosting up the coverage with riders.

Term insurance riders particularly work well for those who might be at risk of developing certain diseases (critical or terminal illnesses). They also work well in case yours is a high-risk profession and accidental death or disability is a high probability. Riders are also a wise choice for individuals who are the sole bread earners for their family, and they fear that a loss of income, disease, or disability can impact their premium paying capability or financial status. 

In such scenarios, a suitable rider can extend your coverage and offer comprehensive protection. 

Important Things to Know About Term Insurance Riders

Before opting for riders, assess your individual needs and existing coverage. Popular riders include critical illness cover, waiver of premium, and accidental death benefits. While riders enhance coverage, they come at an additional premium. 

Understanding the cost of the rider you are opting for is very important. Assess whether it suits your budget and go through the policy terms carefully. By doing so you will also be able to understand policy inclusions and exclusions. Besides, you also need to stay informed about fine prints like waiting periods. A thorough understanding of your options will only help you make informed choices and, in turn, enhance your term insurance policy benefits.

Conclusion 

You can buy more coverage over and above your existing term insurance policy by investing in riders. They cover specific risks like those of disability, accidental death, critical illness, etc. With riders, you can customise your policy in a cost-effective manner and do away with the need to buy multiple plans.

In order to do so, though, you must first assess your needs, budget, and policy terms. This insight will help you get the most out of the financial protection you choose for yourself in the form of insurance riders. The more aligned your riders are to your specific needs, the better covered you will be. 

FAQs on Term Insurance Riders 

Q. Can a term insurance have add-on riders?

Yes, most term insurances can have riders. Some common ones include critical illness cover, accidental death benefits, waiver of premiums, permanent disability benefits, and income benefit riders. These riders vary by insurer, so check the options available with your policy.

Q. Are term insurance riders expensive?

Most riders are quite affordable, but their cost depends on the type of rider and the coverage it offers. When you invest in a rider, your overall cost of insurance will increase due to the slight increase in premium. However, you also get valuable financial protection for specific risks.

Q. What is the income benefit rider in term insurance?

An income benefit rider ensures your family receives regular payouts in addition to the sum assured in the event of your death. With this rider, you can ensure a steady income flow for your family so that they can manage their living expenses.

Q. How does the permanent and partial disability benefit rider work?

This rider provides financial assistance to those suffering from permanent or partial disability due to an accident. It may include coverage for loss of income or a waiver of future premiums, ensuring continued protection.

Related Articles:

Reference Links:

https://www.etmoney.com/learn/insurance/what-are-the-riders-that-are-offered-with-a-term-plan-and-should-i-take-them/

https://www.investopedia.com/terms/r/rider.asp

https://www.investopedia.com/articles/pf/07/life_insurance_rider.asp

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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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##Individual death claim settlement ratio by number of policies as per audited annual statistics for FY 2023-24.

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@As per integrated annual report FY23-24, available on www.hdfclife.com. As of May 2024

ARN- ED/12/24/19104