6 Important Term Insurance Riders

Here are six important riders and their benefits offered by term insurance plan.

What is Term Rider?

A term insurance rider is an attachment, amendment, or endorsement made in a term insurance policy that gives the policyholder additional coverage, thereby increasing the utility of term plan. Riders strengthen a term insurance policy by providing multiple extra benefits, apart from the core offering of a death benefit. 

Most term insurance plans offer the option of including add-on riders to the base plan. However, the riders, their conditions, and their costs vary according to the term plan, the premium, and the insurance company. While some riders are inbuilt within the term plan, others need to be purchased separately by paying an additional premium, after which they will be included in the policy. While purchasing term insurance, check with the insurance agent/advisor about the riders your policy qualifies for.

Types of Term Insurance Riders 

Let us take a look at the various types of term life insurance riders available, that you can include in your base term plan.

1. Accidental Death Benefit Rider

   An accidental death benefit is a term insurance rider that comes with a provision of a lump-sum payment of the sum assured to the beneficiary/nominee in the unfortunate event of the policyholder’s death because of an accident. The percentage of this additional sum is calculated on the original sum assured and may vary from company to company.

   In some cases, there could be a cap on the maximum sum assured on this rider. However, the premium for this term rider remains fixed for the entire policy term.

   Example: Suppose a person has taken an Rs. 50 lakhs term insurance policy and included the accidental death benefit rider for an additional Rs. 20 lakhs on accidental death. In case the policyholder suffers an unfortunate death, Rs. 50 lakhs will still be paid in case of death not caused by accident, and Rs. 70 lakhs in case of accidental death (50+20) will be paid.

   Note: Some life insurance companies do not offer the option to include the accidental death benefit rider in the best term insurance plans in India.

2. Terminal Illness Rider

   When a policyholder buys this rider benefit and has been diagnosed with a terminal illness, the accelerated death rider benefit allows for their loved ones to receive a part of the sum assured (life cover) in advance. This amount can be used to pay for medical expenses. 

   This terminal illness rider can be purchased at low premium rates and also specifies the % of life cover which would be paid in advance, with the rest of the amount given to the nominee/beneficiary after the policyholder’s death. 

3. Accidental Total and Permanent Disability Benefit Rider

   The accidental disability rider benefit covers the risk of the policyholder becoming permanently disabled after meeting an accident. With the inclusion of this rider, most policies pay the term rider benefit amount or a certain percentage of the sum assured to the disabled policyholder regularly for the next five to ten years following the accident-caused disability.

   They are considered as an income source for the policyholder and their loved ones. This rider is often coupled with the Accidental Death benefit rider and becomes active if the life assured becomes disabled after an accident. 

4. Critical Illness Benefit Rider

   With the Critical illness rider benefit, the policyholder receives a lump sum on the diagnosis of a critical illness pre-specified in the policy. Most major illnesses are a part of the Critical illness cover, including cancer, heart attack, stroke, paralysis, coronary artery bypass graft surgery, kidney failure, major organ transplant, etc. Critical illness rider, like other riders, comes as an extra benefit to the main benefit of the plan. 

   Following the detection of the critical illness, the policy may either continue or terminate as per the policy terms and conditions. Sometimes, the rider sum assured is deducted from the life cover and the policy coverage continues for the rest of the policy term for the decreased life cover.

5. Waiver of Premium Benefit Rider

   This term rider ensures that if the policyholder is unable to pay future premiums due to income loss or disability, the future premiums will be waived off. The best part is that the policy still remains active for the entire policy term. Contrarily, in the absence of this rider, if the policyholder is disabled or faces income loss due to a critical illness, the policy will expire and no death benefit will be paid due to non-payment of remaining premiums. There are two variants of the rider available and you can choose any of the following to include in your term plan:

   Waiver of Premiums on Accidental Total and Permanent Disability (WOP on ATPD)

   This term insurance rider ensures that in case the policyholder suffers an accident and is rendered totally or permanently disabled, the remaining premiums of the term plan will be waived off. Since accidental disabilities are uncertain and can happen to anyone, this term plan rider allows people to stay covered under the plan even if they are unable to pay for their remaining premiums.

   Waiver of Premiums on Critical Illness (WOP on CI)

   On the diagnosis of a critical illness that can result in a job loss, this rider can help waive off all the remaining premiums. This means that the policyholder will still be covered for the entire policy term and not be burdened with the stress premium payment and focus on their recovery.

6. HospiCare Rider

   HospiCare rider pays the rider sum assured on the hospitalization of the policyholder as per the plan’s T&Cs. Several insurers offer a percentage of the sum assured as a benefit on the admission of the policyholder in the hospital and double the benefit amount on admission in the ICU. There are some limitations to this term rider benefit which you should go through while buying the plans to avoid future confusion.

   *All savings are provided by the insurer as per the IRDAI approved insurance plan. Standard T&C Apply

Final Thoughts

Term insurance riders allow customers to customize the plan as per their requirements. Therefore, you should always assess the need of the specific riders and compare their premium rates online before purchasing the one with the most suitable prices. You can compare them on the basis of their benefits, inclusions, and exclusions offered by different companies. Always consult your financial advisor or a policy agent for better clarification on the T&Cs of the rider.

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