When purchasing a life insurance policy, you must keep in mind that your insurance policy offers you a combination of features that will give you the best possible coverage at a reasonable price. Also, sometimes you may overestimate your insurance needs and take a higher coverage unnecessarily and end up paying higher premiums. In order to avoid situations such as these, you can choose riders to complement your life insurance policy, which can give you additional features at reasonable rates. These riders can be added to your basic insurance policy.
The advantage of these riders is that although you have to pay additional premium for these, the cost is relatively lower as the required underwriting is also lesser.
When do You Need Riders?
Since a life insurance policy is a long-term product, your insurance needs might undergo minor changes as you progress through your life. There may be changes in your marital situation, you might have to undertake the responsibility of your children, elderly parents etc. Thus, it can be safely said that by opting for a rider, you are making a change in your life insurance plan at a marginally higher premium.
When you are reviewing your term insurance plans, if you come across components that you previously didn’t think were important, you can take riders to include additional features.
In order to help you get a better picture of the available riders, we enlist some common and important riders that you can opt for and save money by securing additional protection at a reasonable cost.
Waiver of Premium Rider
This rider is an extremely important one as it keeps you cushioned against unprecedented accidents and disabilities that might strike you and your family. If owing to some disability, you lose the ability to earn and are not able to pay you premium, your policy might expire and you will not receive any death benefit owing to the non-payment of premiums. However, upon opting for the waiver of premium rider, you will have the assurance that in case of any disability you suffer from when the policy is ongoing, your premiums will be waived off. This can include other situations like loss of job etc.
The advantage of this rider is that it helps relieve you of worries related to the payment of your premiums and hence consequently your policy becoming inactive. Also, you do not have to worry about defaulting on your premiums and facing the consequences. Hence you can opt for this rider to be better prepared for adverse situations, especially if you are involved in a risky profession.
Accidental Death Rider
Your basic life insurance will offer you the regular death benefit and the sum assured you are entitled to. However, what if there is death caused by an accident? You can opt for the accident death rider if you want to provide additional security to your family. By opting for this rider, you will ensure an additional sum of money for your family in case of accidental death. Often, the costs associated with accidents are higher, owing to medical expenses and several financial responsibilities and in such a situation, the accidental benefit will help provide relief to your family.
You can treat this as an additional benefit as your family will still receive the sum assured as death benefit.
The positives of opting for this rider are that you can avail additional protection at a lower premium which is fixed throughout the term of the insurance. However, there is a limit on the maximum sum insured on this rider.
Before opting for this rider, you must make sure that you read up on the terms and conditions associated with this rider, as the words of insurance companies can be difficult to understand and they can have several exclusions to what can be considered as an accident. So think about the pros and cons before opting for this cover.
Critical Illness Rider
A critical illness insurance rider can be deemed as one of the most important riders that you can invest in to secure yourself against unprecedented medical ailments of serious nature. As is commonly known, medical expenses are mounting with every passing day and being unprotected especially when a serious ailment strikes can drain you of your accumulated wealth in a jiffy. In order to shield yourself from such a sudden jolt, you can opt for the critical illness rider so that your expenses are taken care of by your insurance provider when you are unwell, so that your accumulated wealth remains secure.
Read up on the list of illnesses that are covered by your insurer to ensure that it is a comprehensive list and covers most diseases of a severe nature like cancer, stroke, heart attack, paralysis etc. Owing to this rider, you are eligible to receive a lump sum amount upon the diagnosis of a critical illness, as listed by your insurance provider.
The critical illness rider can be available from your life insurance provider as well as your general insurance provider. Several critical illness covers also protect against loss of earnings so read the offer documents carefully. Also, it might be prudent to invest in a critical illness rider as the premium amount does not vary through the term of the policy.
Accelerated Death Benefit Rider
An accelerated death benefit rider comes into play when you are diagnosed with any terminal illness, which in effect can shorten your lifespan. Hence, as per this rider, a part of your sum assured is paid out in advance towards the costs incurred for the treatment of your condition. With less than a year to survive, the amount meted out can be used to pay for treatment expenses and other costs involving medicines etc. Whatever amount remains, will be paid to your family as following your death.
This rider also comes as an emotional support in times of distress for your family. Also, you can avail this rider at a significantly lower cost. The rider metes out a pre-determined amount as a one-time lump sum payment.
Income Benefit Rider
This rider is also meant to offer additional protection to the insured person’s family in case of sudden death. With this rider, a part of the sum assured is paid out to the family as a regular supplementary income. This rider is an essential one if you the breadwinner of the family with dependants as it ensure that your family’s needs are not compromised with even in your absence.
Permanent and Partial Disability Rider
Any kind of permanent or partial disability owing to an accident of any kind can lead to the loss of regular income. This rider assures the insured person a portion of the sum assured in instalments as a source of income. This rider can ensure that your family is not left unsecured if anything were to have happened to you. Upon total disability, you will receive the entire sum assured and a part of the sum assured upon partial disability. Usually insurance companies pay this amount in regular instalments over a period of 5-10 years. However, read the terms and conditions carefully as different insurers have a different set of guidelines.
Over to You!
While these are the most popular riders that you can opt for to broaden your life insurance coverage, do not take up all the riders in a rush without evaluating your insurance needs. Firstly, study and understand the extent of coverage your basic insurance plan is providing and choose the riders, which are not included in your insurance plan. While being under-insured can be a bad thing, you do not need to buy riders for everything.
Remember, the key to successful insurance planning is to first evaluate and then invest!
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