Riders are add-on benefits that you can buy to increase the coverage of your basic life insurance policy by paying an additional amount along with the premium paid towards the policy. They allow you to customize the policy according to your own needs and provide enhanced protection if you meet the terms and conditions of the riders.
Although you may pay an additional premium for buying the riders, the amount is small because minimal underwriting is required.
This is the list of 6 common life insurance riders and what they cover:
- Accidental Death Rider
- Waiver of Premium Rider
- Accelerated Death Benefit Rider
- Income Benefit Rider
- Life Stage Benefits
- Return of Premium Rider
Let’s discuss all these riders in detail.
- Accidental Death Rider: An accidental death rider provides an additional amount as a death benefit if the insured dies because of an accident. In most cases, the additional amount paid is equal to the face value of the base policy, so the insured's family gets dual benefits. If you are the sole earner in the family, it is an excellent way to ensure that your family has the financial safety net they need.
- Waiver of Premium Rider: Under this rider, the policy's premium is waived off if the insured becomes disabled permanently or loses his income because of an injury or illness before they attain a certain age. The disability of the breadwinner can lead to an imbalance in the finances of a family. Therefore, this rider ensures that the insured does not have to pay the premiums but the policy remains active. The definition of "totally disabled" varies from company to company, so check the terms and conditions.
- Accelerated Death Benefit Rider: Under this rider, the insured gets a part of the death benefit if he is diagnosed with a terminal illness that shortens his life span by a considerable duration. In most cases, the insurers pay a percentage of the death benefit to the insured so that he can cover the costs of treatment. The insurers may deduct the amount received plus some interest from the death benefit on the insurer's demise. The premium charged on this rider is negligible, or in some cases, there is no premium charged for this rider. There are many different definitions for "terminal illness," so read the policy carefully before buying.
- Income Benefit Rider: In case of the insured's death, the family will be financially secure due to the steady flow of income. When you purchase the rider, you can decide the number of years you want your family to receive the benefits. There are many benefits of this rider- the obvious one is that your family's finances will be taken care of thanks to the regular income they will receive.
- Life Stage Benefits: Under this rider, the insured can buy extra coverage for a certain period without any additional medical exams. This rider is beneficial if the circumstances in your life have changed considerably, like marriage, the birth of a child, etc. If there is a decline in your health, you can buy extra coverage without giving any proof of your insurability. The rider may also provide you the benefit of getting your base policy renewed without any medical examination.
- Return of Premium Rider: Under this rider, you pay some extra premium, and at the end of the policy term, the premium amount is returned to you in full. In case the policyholder dies, the amount of premiums is paid to the beneficiary. There are many different phrases and meanings for this rider so ensure that you read the policy carefully.
Although you might not be able to change the policy, riders allow you to customize the policy according to your needs. You must read the policy document carefully before buying Life Insurance. Moreover, you must evaluate the riders carefully and check which ones are most suited for you and your family's financial goals.
1. When can I add life insurance riders to my plan?
You can add the rider to your base plan at any time, during or after purchase, as long as you have a certain number of years left on your policy term.
2. Do life insurance riders have any exclusions?
There are general exclusions for life insurance riders, which are:
- Suicidal act
- Adventure Sports
- Drugs/ Substance abuse
- Natural disasters/ calamities
3. Which riders should we take with term insurance?
It is important to understand your needs before opting for a rider in your term insurance plan. Riders provide extra coverage to your insurance plan, often at an additional cost.
Disclaimer: The information published in this article is for reader′s reference only. The content of this information is to provide an overview of your life insurance needs. It should not be relied upon for personal, medical, legal or financial decisions, and you should consult an appropriate professional for specific advice. The makes no representations about the suitability, reliability, timeliness, and accuracy of the information, services, or any other items mentioned on this subject for any purpose whatsoever.