Buying a term insurance plan? Don’t forget to include riders
Who doesn’t like something extra which provides a value-added benefit? In a term insurance plan, there are extra coverage benefits which you can opt and make your cover more comprehensive. Do you know about such extra benefits? They are called riders.
If you are looking for a term insurance plan, you would come across the word ‘rider’ in many plans. Most of you don’t understand the meaning of the word and so avoid opting for the available riders. This is a mistake. Riders provide you with a better scope of coverage and make your plan comprehensive. Let’s understand what riders are and how they prove beneficial –
What is a rider?
A rider is an additional coverage clause which you can add to your basic term insurance plan. When the rider is added, an extra coverage benefit is added to the plan. The choice of a rider is completely voluntary and depends on you, the policyholder. If you want, you can add one or more available riders to the base policy for added protection.
Some salient features of riders
Riders have some unique features which include the following –
- A rider can be added either when buying the term insurance plan or at any renewal. Similarly, once bought, you can opt out of the rider at any policy renewal.
- An additional premium is payable for each rider that you choose to add to the plan
- Riders have no maturity value. If the rider is not utilised during the term of the plan, no benefit for the rider would be paid on maturity
- Though you can add multiple riders to your term insurance plan, the total rider premium should not be more than 30% of the base premium for the term plan
- Premiums payable for riders are also allowed as a deduction under Section 80C or Section 80D depending on the rider selected.
- The rider sum assured is, usually, equal to the sum assured of the base plan. However, there is a limit to the rider sum assured. If the base plan’s sum assured is higher than the rider’s coverage limit, the rider sum assured would be allowed up to the specified limit only.
Types of riders available
Here are some of the popular riders which are available with term insurance plans –
1.Accidental death benefit rider
Under this rider, an additional sum assured is paid if the insured dies during the term of the plan due to an accident.
2.Accidental permanent disability benefit rider
This rider is helpful in case the insured suffers a permanent total disability due to an accident. Under the rider, the future premiums are waived off in case of disability but the plan continues. Under some riders, a lump sum benefit is paid in case of a permanent disability.
3.Premium waiver rider
Under this rider, the future premiums are waived off if the policyholder, who is different from the life insured, dies during the term of the plan. A premium waiver rider might also waive off the coverage in case the policyholder suffers from a permanent disability during the term of the plan.
4.Critical illness rider
This is one of the most common and popular riders which is available with term insurance plans. Under this rider, a list of critical illnesses is covered. If the insured is diagnosed with any of the covered critical illness, the rider pays a lump sum rider sum assured immediately. The base plan continues and the rider benefit can be used for availing medical treatments or for any other financial obligations.
5.Terminal illness rider
Though the rider sounds similar to critical illness rider, there are some differences. Terminal illness rider covers all illnesses which are terminal in nature. If the insured is diagnosed with a terminal illness, the lump sum rider sum assured is paid.
6.Surgical benefit rider
Under this rider, if the insured undergoes a major surgery during the term of the plan, the rider benefit is paid. The rider, therefore, acts as a health cover for surgical treatments.
7.Hospital daily cash rider
If the insured is hospitalised during the term of the plan, the rider pays a specified benefit daily for the period the insured remains hospitalised. There is, however, a maximum period of hospitalisation for which the benefit is paid.
You can take a pick of your choice of riders for making your term plan more comprehensive. While premiums paid for the first three riders qualify for tax deduction under Section 80C, premiums paid for the last four allow tax deduction under Section 80D. So, riders not only make your plan more comprehensive, they allow tax advantages too. So, choose the desired riders and get more from your term insurance plan.