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Your Complete Guide to Choosing Term Insurance Riders Effectively

By PolicyBazaar
  | Published: 13 May 2020 | Last Updated On: 08 February 2021

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Term insurance is considered as the ideal risk management tool that offers a blanket of protection against uncertainties. In order to maximize the protection and to extract the most out of a plan, it is equally important to focus on the term insurance riders as well. These auxiliary riders allow insurance seekers to customize their term insurance plans based on their individual needs.

Very often, people lay emphasis on all other factors like premium, coverage, term, claim-settlement ratio but completely ignore term insurance riders. Riders are effective tools that enhance the protection of your basic plan and ensure that your loved ones and family members are safe against phases of financial instability arising due to disability or the demise of the sole breadwinner of the family.

If you are looking forward to getting a term insurance plan to secure the future of your loved ones financially, you should definitely consider opting for riders. In this thread, we will be shedding light on some of the most important term insurance riders that will not only provide additional protection but will also provide you peace of mind.

However, before we dive into the in-depth process of choosing the right term insurance riders, let us first take a quick look at what are riders and how do they work in real-time?

What are Term Insurance Riders?

Like any other accessory, term insurance riders may be considered as an accessory to the basic plan that improves the functionality and worth of an insurance policy. The coverage offered by these additional term insurance riders is payable in case of the occurrence of a particular event that is covered via that rider. For instance, a personal accidental rider offers additional coverage over and above the basic term plan in case the policyholder meets an accident.

Different Types of Term Insurance Riders

There are numerous term insurance riders available with the basic term insurance plan that maximizes the protection and customizes the policy as per the needs of the policyholder and the nominees. The different types of term insurance riders are as follows-

Accidental Death/ Temporary or Permanent Disability Rider

Accidental deaths are sudden and tragic which often leaves the family members of the deceased stuck in a financial turmoil flipping their lives upside down. Especially if the deceased was the sole bread-winner of the family the situations might turn worse than expected. The news of demise is not just emotionally difficult to handle but also financially.

To ensure that your loved ones do not struggle in such difficult phases, accidental death/ temporary or permanent disability riders are quite useful. Commonly known as personal accidental riders, they offer much needed financial cushioning over the top of the basic death benefit of the term insurance plan. This rider is extremely crucial for people that work in risky environments as they provide financial protection to your family during the times, they need it the most.

Critical Illness Rider

Another common yet highly useful term insurance rider is the critical illness rider, that covers the expense incurred in the treatment of a critical illness right after its diagnosis. This term insurance rider offers a lump sum benefit to ensure that you don’t drain your precious savings on the treatment. Quite a lot of times especially in the case of term insurance plans, critical illnesses are not covered. Therefore, to ensure that you are safe against any critical illness, this term insurance rider is inevitable.

If you have a family history of critical illness then you should never skip the critical illness rider. Studies and researches have shown that people who have a family history of critical illness are 4 times more prone to this illness as a result of genetics. In case, you contract any critical illness you’re plan will pay for your treatment. However, if the policyholder passes away due to the illness the sum assured would still be paid to the nominees of the policy.

Waiver of Premium Rider

The term insurance plan provides coverage to the policyholder and in return to the services the policyholder is supposed to pay a fixed amount at fixed intervals known as the premium of the plan. The premium of term insurance plans is determined on the basis of several factors like the age of the applicant, the coverage, term of the policy, etc.

In case the policyholder is unable to pay the premium due to any reason be it illness, loss of a job, inflation that is where the waiver of premium rider comes into the picture. This term insurance rider ensures that your term plan is active even if you are unable to pay the premium due to a valid emergency. In case of an emergency due to which you are unable to pay the premium of the plan all you need to do is just inform the insurance provider with proof and your plan would be active.

Income Benefit Rider

Another inevitable term insurance rider, especially for sole breadwinners of their families, is the income benefit rider, which helps the family members of the deceased with an alternative regular flow of income. In case the sole breadwinner of the family falls ill or meets an accident resulting in disability or demise there is a sudden halt at the influx of income causing financial instability.

However, with the income benefit rider, the dependents of the breadwinner can continue with their day to day activities without struggling. The term insurance will ensure a regular flow of capital in the form of income over the basic term insurance plan so as to ensure that your loved ones are safe and secure during turmoil.

Term Rider

Apart from all other different types of riders, there is another useful term insurance rider known as the term rider. With the help of a term rider, you can provide an additional amount to your loved ones over the basic sum assured of the plan. It is quite simple to avail the rider; all you need to do is to pay a small amount over the basic plan which will activate the term rider and secure the future of loved ones and the nominees.

In a Nutshell

The trail of life goes through a series of ups and down with a plethora of uncertainties, none of us are aware of what is waiting for us the very next moment. While term insurance plans provide protection against these uncertainties, term insurance riders ensure to provide the maximum.

Choosing the correct term insurance rider will give you additional benefits and ensure that you and your family and covered against all possible strokes of uncertainties.