Riders in life insurance are add-on covers that you can purchase along with the base cover. Riders push up the coverage bracket and offer added protection. You need to pay an extra premium for each rider you choose. This is why you need to carefully select the types of riders in Life Insurance and have the perfect mix of covers. What are the benefits of riders in insurance, and why must you have these extra covers? Read in to get all the answers to your questions.
Types of Riders in Life Insurance
As stated, getting suitable types of riders in insurance is essential. To choose the appropriate ones, you should know what the available options are. Here are some options to choose from:
- Critical illness Rider: Critical illness is one of the most popular life insurance riders. Here, you get the lump sum assured if you are diagnosed with a severe and critical illness like cancer, stroke, etc. You can use the money in any way you wish and care for your urgent needs and requirements.
- Accidental death benefits Rider: If you die in a road accident, your family will get an added sum assured, over and above the sum assured in the basic life insurance plan.
- Disability rider: The disability rider comes into force when you, the policyholder, are left disabled due to an accident or injury. You get compensated if you are left total and permanently disabled after the mishap.
- Waiver of premium Rider: This is a convenient rider where all future premiums are waived off under certain conditions if the policyholder becomes disabled and loses his income or illness. Also, in a child benefit plan, if the parent dies, the policyholder stays in favour of the child while all future premiums are waived off.
- Family Income benefit Rider: If you opt for this rider, your family gets an added sum assured, which is paid in monthly instalments after your death and paid overtime. This acts as an income replacement for the family members. This rider is beneficial if you are the sole or the primary breadwinner of the family.
These are a few of the most common types of riders in life insurance that you can consider getting. Understand the features of riders in insurance and then select the ones that are of best use to you.
Benefits of adding a Rider to your Life Insurance plan:
As mentioned above, riders add a lot of value to your life insurance policy. Here is some rider benefit can be availed under the base policy:
- Extends the scope of cover: One of the most significant benefits of riders in insurance is that they allow you to increase the scope of coverage. When you add a critical illness rider or a death benefit rider, you or your nominees stand to receive higher compensation than the base policy if anything happens to you. This is an added assurance, and it helps your family a lot in difficult times.
- Makes it cost-effective: Riders are available at an added cost, but they prove to be economical for the value they offer. When you attach a rider to your life insurance cover, you add more value to your overall life cover, which proves to be very advantageous in the long run.
- Allows you to tailor the policy: You can customise your life insurance plan precisely according to your own needs and requirements. This is highly beneficial as you get to adjust your coverage and benefits as per your needs.
- Additional tax benefits: Last but not least, you get to have additional tax benefits when you add a few riders to your life insurance policy. Specific riders, such as the critical illness rider, have a health insurance component attached to them. Therefore, the tax benefits available under Section 80D are also applicable here, and you end up with added tax-saving opportunities, along with the usual Section 80C benefits.
The rider benefit availed under the policy makes the life insurance coverage more attractive. This is why you should also consider attaching a few of these riders to your life insurance plan.
Rider benefit availed under policy - Points to Remember:
While there are some desirable features of riders in life insurance, there are also some critical points you should keep in mind when you get life insurance riders. They are:
- Riders push up the cost of the cover-
While you do get several benefits when you add a rider to your life cover, it also pushes up the policy's overall cost. It would help if you kept your budget calculations in mind to ensure the policy premium doesn't become too high due to the addition of the life insurance riders.
- All riders may not be useful-
The life insurance requirements of different people vary. The needs you have from your coverage may not be identical to those of your brother. This is why you need to assess your needs and go over the riders' features in insurance to ensure you need that same rider. Not every rider may be of use to you.
- It can be bought with all types of life insurance-
You can buy riders with all types of life insurance plans such as term plans, endowment plans, ULIPs, child plans, pension plans, etc.
These are some of the essential features of riders in insurance that you should keep in mind before you buy any add-on life insurance cover.
To sum it up:
There are many benefits of riders in insurance, and this is precisely why you should look to add a few of these add-on covers along with the basic life insurance plan that you buy. Keep the features of riders in insurance in mind and choose the various types of life insurance riders to get yourself properly covered at the possible price. Evaluate the covers available under each life insurance rider and weigh them against your needs to get a realistic picture. Then, buy the ones that are suitable for you.
Must read: What is ULIP Plan?