Life is unpredictable and it is important always to be prepared well in advance with insurance coverage for yourself and your family. However, sometimes only the insurance cover is not enough, and you might need something more to cover all your fears.
What is an Insurance Rider?
An insurance rider is an extra insurance cover over and above your insurance policy. Riders are optional in an insurance policy; you can avail them as an add-on to your primary policy.
Types of Life Insurance Riders
- Critical illness Rider: Critical Illness Rider provides coverage if you are diagnosed with any critical illness such as cancer, heart attack or stroke, and it provides coverage over your primary insurance plan.
- Accidental Death Rider: As the name suggests, an accidental death rider provides you with an additional coverage in the event of the death of the policyholder in an accident; the beneficiaries of the policy will get the accidental death benefit of the life insurance policy.
- Disability Rider: This add-on provides coverage in the case the policyholder gets disabled for any reason and is not able to work. The policyholder can also avail of any medical treatment cost.
- Waiver of Premium Rider: In a case when the policyholder is not able to pay the premium anymore because of his situation, such as disability or hospitalisation, he can avail of this add-on and can waive the premiums for the life insurance policy.
- Income Benefit Rider: As the name suggests, this add-on helps in generating income for the policyholder in the case of disability and in situations when they are unable to work. This add-on is helpful for individuals who want to secure their standard of living in the future.
Reasons to Add Riders to Your Life Insurance Plan
- Increases your Insurance Coverage: Adding a rider to your life insurance plans is a smart option as it increases your insurance coverage and provides safety over and above your basic insurance plan. For example, if you have insurance worth Rs. 1 crore, you can add a rider worth Rs. 25 lakhs, and your new insurance cover will be Rs. 1.25 crore.
- Covers More Scenarios: Some scenarios, such as accidents, critical illness, etc, may not be covered in your basic term plan. But you can add them over your basic plan by adding a rider. Moreover, the premium paid for life insurance riders is eligible for tax deductions under Section 80C of the Income Tax Act.
- Premium Waiver: You can opt for a premium waiver add-on with your basic plan. When you claim your insurance policy in an emergency, you can avail of premium waiver benefits. When the policyholder is the patient or in a situation where he cannot pay the premium, a premium waiver can save them.
- Special Add Ons: Some add-ons support extra benefits to your insurance policy, such as a child’s education support and the policy remains beneficial in case of the policyholder’s unfortunate death.
- Benefits of Multiple Plans: Riders provide you with dual benefits in your insurance. You can purchase an add-on while buying the policy, or you also have the option to purchase an add-on after a year, as per your preference.
Things to Consider While Selecting Riders
Know Your Needs
It is of utmost importance to consider your life situation and specific risks that may arise in the future and you can select riders based on these concerns.
Cost-Benefits
Evaluating each rider’s cost against the potential benefit is important. Some riders may not be beneficial for you. For example, if you opt for a critical illness rider and you already have another health insurance, the rider may not be of use.
Customisation
You must opt for more flexible riders that can be customised because your circumstances in life may change. You can always use a life insurance premium calculator while customising your plan.
Tax Deductions
Some riders offer tax benefits, which you can avail and claim up to Rs. 1.5 lakhs under Section 80C of the Income Tax Act.
Conclusion
To get the most out of your insurance policy and add-ons, it is crucial to do a complete research on riders and add only those helpful riders. A combination of valuable riders ensures a customised approach to securing financial well-being during uncertainty.
