We earn because we want to be financially secure. Although income can be delayed for several different reasons that are beyond our control. This is where life insurance comes to our rescue. Life insurance policies are a necessity in today’s world. They offer a world of advantages to you and your families. Protecting financially in the most difficult times of your life, these policies prove to be a godsend!
These policies serve as our financial backup during emergencies caused due to sudden death or accident. These incidents are capable of having not just emotional consequences but also some major financial consequences. A term insurance cover gives a safety net that allows your loved ones to get back up in your absence.
A term insurance policy gives the benefit of structuring one’s plan in a way that best suits your requirements through the many options it offers. But apart from this advantage, insurance providers tempt the policy buyers with some extra add-ons called riders on their term insurance plan. These term insurance riders cover the additional risks and come at an additional cost that is added to your premiums of the base plan.
What are insurance riders?
Riders are the provision of an insurance policy that allows one to customize their basic insurance policy by either adding extra benefits or amending the terms of the policy. The additional coverage offered by these riders provide additional protection from risks. They are add-ons that can be opted for alongside the existing term insurance policy at extremely affordable rates in order to extend the coverage of the insurance. These term insurance riders come at an additional cost that gets added to your premiums. To put it simply, these riders make the coverage offered by term insurance much more robust, offering more than just the death benefit.
The different term insurance riders
Let us now understand some of the riders popularly offered with term plans:
- Accidental death rider: Under this term insurance rider if the insurance holder meets his demise due to an accident, be it a road accident, a plane accident, or an industrial mishap, during the active term of the policy, his family will be entitled to an additional sum that was insured under this rider by the insurance provider. The amount received will be much more than the death benefit received by the dependents under the basic life insurance plan. For instance, if an individual has a term cover of AED 10,000,000 but they have also chosen the accidental death benefit rider along with it, costing AED 1,000,000. This implies that in the event of an unforeseen accident resulting in the policy holder’s death, their family will receive the sum assured of AED 10,000,000 as death benefit as well as the AED 1,000,000 for the rider.
- Accidental disability rider: Accidents can end up causing grave disabilities that can leave an individual helpless. This rider covers against such unfortunate events. This can be obtained as a lump sum amount after the accident or can be received as monthly income for a pre-decided term of two years, five years, or even ten years as per the financial requirements of the insured.
If the disability is permanent, making it difficult for the insured to support himself and his family financially, the entire sum assured of the term insurance rider is paid to him. However, If the disability is partial, which means that the policyholder is able to work, only a part of the sum assured of the rider is offered. The percentage of this sum assured to be received by the insured depends on the severity of the disability depending upon the doctor’s declaration.
- Critical illness rider: This rider enables the policyholder to pay for the medical expenses if he or she is diagnosed with one of the listed critical illnesses mentioned in his or her policy. The policyholder will be paid the sum assured for this rider in such circumstances. For instance, if the policyholder has chosen a term insurance policy of AED 10,000,000 along with a critical illness rider costing AED 2,000,000. If they are diagnosed with any of the critical illnesses, the insurer will pay AED 2,000,000 assured under this rider, allowing them to take care of the medical treatment required.
Waiver of Premium rider: There are 2 types of waiver of premium riders
- Waiver of premium on disability: in the unfortunate event of any physical disability, this rider allows the policyholder to skip the premium payment of the term insurance policy in the future without deactivating the policy until the term is over.
- Waiver of premium for critical illness: upon being diagnosed with a critical illness mentioned in the term plan, the future premium payments of the term plan will be waived off without causing the policy to lapse.
Income benefit rider: Opting for this rider will make sure that your family continues to receive the sum assured in the form of a monthly income instead of the lump sum amount for a fixed period in case of your death while the policy is still active. This term insurance rider requires the policyholder to decide the time period for which their dependents will get its benefits.
Reasons to buy insurance riders
- Greater protection: The primary reason to add a rider to your term insurance policy is to ensure the safety of your loved ones from different hazards. The death benefit from a term plan is enough but it will prove to be useless in case of an accident that leaves you incapable of financially supporting your family. Riders when added to a term plan offer much more protection against accidents, disabilities, or loss of a job.
- Enhanced coverage: The addition of riders to your policy increases the overall protection pool. For instance, if the term plan offers a sum assured of AED 10,000,000, a sum of AED 2,500,000 as a critical illness rider will increase it significantly. This extra coverage will come in handy when one has to pay the extensive hospital bills.
- Premium waivers: The risk covered by these riders help in offering financial assistance if the policyholder ends up suffering from an illness or disability. These instances will not force you to discontinue your insurance policy due to a lack of income. The premium waiver benefit comes to the rescue, allowing the insurance plan to continue without paying the premiums.
- Hassle-free management: If you were forced to buy a new insurance plan for greater protection, you will have to pay additional premiums as well as deal with multiple policies. On the other hand, riders work seamlessly alongside the base life insurance cover.
- Special benefits: Riders make your base life insurance plan much more rewarding due to the added benefits attached. For instance, some insurance providers offer a child support rider that enables your policy to fund your child’s education while offering the sum assured to your family after your demise.
The Bottom Line
Term insurance riders make your term plans a lot more comprehensive albeit a little expensive. However, it is a little price to pay as opposed to the multiple benefits offered by them. These riders seem to be a blessing in disguise in times of need.