Important Term Insurance Riders and Their Benefits
Term Insurance is the simplest form of life insurance that offers a payout in the form of a death benefit to the policyholder’s beneficiaries in case of an unexpected demise. While buying a plan, we expect a single policy to provide us multiple benefits apart from the base offering.
In often cases, even if we hear about additional benefits with a plan we bluntly turn it down thinking about the cost. Like it is said, you shouldn’t make judgments based on incomplete information, a decision of turning down the add-ons without being completely informed about them could turn into a foolish decision. These additional benefits, known as the term insurance riders, can help in straightening your term planning by paying a little on the top.
A term insurance rider is an attachment or endorsement made in the base term policy that gives the insured supplementary coverage. Term insurance riders strengthen a policy by providing numerous additional benefits on top of the basic offerings.
Term Insurance Riders
The riders available for term insurance are:
Accidental Death Rider
During the term of your policy, if the policyholder passes away due to an accident, this add-on pays an additional payout on top of your death benefit. The percentage of this additional sum assurance varies from provider to provider. In some cases, it is possible that the provider has a cap on this rider for the maximum sum assured. However, the premium is constant for the entire term of the plan.
People often hold this myth that with this rider the insured will receive sum assurance only if the death is caused by accident and not otherwise. However, even with this rider, the base sum assured will be paid. The rider just offers an additional sum on top of the base sum, in case the demise is caused by an accident.
Permanent and Partial Disability
If the holder of the policy meets with an accident and is faces any permanent or partial disability because of it, this rider comes into action. With the inclusion of this add-on, most term insurance plans pay the insured regularly for a fixed period of time following the accident. The percentage is pre-decided for the sum assured. This policy can only be used if the disability is caused because of an accident and is usually paired with the accidental death rider.
On adding this rider, the insured receives a payout on a valid diagnosis of a critical illness. This critical illness is pre-specified in the insurance policy, most major illnesses are a part of this cover. Some of the illnesses are a heart attack, cancer, stroke, kidney failure, etc. After the detection of such a critical illness, the insured may continue or terminate the plan as per the terms and conditions of the term insurance plan.
If you get this rider, you are assured that if you are unable to pay the future premiums due to loss of income or disability, the future premium charges will be waived off, and your policy will still be active.
Accelerated Death Benefit
If a person is suffering from a terminal illness, the medical bills for the treatment faced by the family are heavy. If the person has taken this rider, the family is eligible to get a portion of the sum assured in advance. This rider comes in great help during critical times. The advanced sum assured is pre-specified under this rider.
This rider comes into action primarily for income generation after the demise of the policyholder. With this rider, the family of the insured gets additional income per year for a fixed period of time, along with the death benefit.
Over to You!
Before including any term insurance riders in your term insurance policy, it is important to understand the benefits, inclusions, and exclusions of the riders. It is also advisable to compare the different costs of the various riders offered by the various providers. It is the most important to assess the needs of the particular riders after thorough research before opting for them.
Even though we cannot prevent unfortunate situations because of the unpredictability of life, we can certainly plan for them. Term insurance riders play an important role when you plan for the unforeseen situations that can occur, and their inclusion will benefit your loved ones.