What are Term Insurance Riders and Their Benefits?

What is Rider in Term Insurance?

Term riders are the add-on benefits that can be added to the base term plan to enhance the plan’s base coverage. These are either optional or inbuilt into the base plan. While inbuilt riders are free of cost, the optional riders can be included at nominal extra costs paid with the base premium amount. These term insurance riders enhance the coverage and provide protection against a range of eventualities like critical illness, disabilities, and more.

Note: Know what is term insurance first and then buy a term plan for your loved ones.

What are the Term Rider Benefits?

Here is the list of all the benefits of including term riders in your base term insurance plan.

• Enhanced Coverage: Term insurance riders can increase the coverage of your regular term plan. Your base term insurance plan might not provide coverage against accidental disabilities, medical costs, or waiver of premiums, but with riders in term insurance, you can get coverage against these eventualities as well.

• Pocket-friendly Prices: Buying different life insurance plans to fit different needs can be expensive. Instead, you can customize your term plan to fit all your insurance requirements by including term insurance riders to the base at affordable prices.

• Provides Emergency Income: Term life insurance riders like HospiCare benefit can help provide financial aid in case you are hospitalized. This rider payout can help you pay for the medical bills and treatments in peace and lets you focus on your recovery. 

• Tax Benefits: You can get term insurance tax benefits under sections 80C and 10(10D) as per the prevailing tax laws of the IT Act of 1961. But by including term insurance riders like HospiCare and Critical Illness you can also get tax benefits under section 80D as well.

What are the Different Types of Term Insurance Riders in India?

Let us take a look at all the term insurance riders list available in India that you can add to your base term life insurance plan for increased coverage.

• Accidental Death Benefit Rider

• Accidental Total and Permanent Disability Rider

• Critical Illness Rider

• Waiver of Premium Rider

• HospiCare Rider

• Terminal Illness Rider

Note: It is suggested to calculate the term plan premium on the term insurance calculator online tool by Policybazaar before buying the plan.

1. Accidental Death Benefit Rider

   The Accidental Death Benefit Rider pays an extra rider sum assured in case of the policyholder’s unfortunate death due to an accident. This amount is paid in addition to the base sum assured of the policy. 

   For example, a person purchased a term life insurance for a sum assured of Rs. 2 Crore and included the accidental death benefit rider in their base plan for Rs. 50 Lacs. In case the policyholder suffers an unfortunate death due to an accident specified in the policy’s terms and conditions, the nominee would receive the base sum assured i.e., Rs. 2 Crore and the rider sum assured Rs. 50 Lacs. Therefore, the nominee would receive a total of Rs. 2.5 Crore on the death of the policyholder.

2. Accidental Total and Permanent Disability Rider

   This term life insurance rider provides coverage in case the policyholder suffers a total or permanent disability, which means, the loss of two limbs due to an accident. In this, a percentage of the base sum assured is paid over a span of 5 to 10 years regularly to make up for your loss of income due to disability. 

3. Critical Illness Rider

   With a critical illness rider, you can receive the rider sum assured as a lump sum amount in case of diagnosis of any critical illness specified under the plan details. Some examples of critical illnesses covered are Heart Attack, Cancer, Stroke, Coronary artery bypass graft surgery (CABG), Kidney failure, and Paralysis. The payout can be used to pay for the treatment of the illness and help you focus on your recovery. You should always compare the list of critical illnesses covered under a plan and purchase the plan with the most comprehensive coverage.

4. Waiver of Premium Rider

   The waiver of premium rider can waive off any of the remaining premiums if added to the base plan. This is the best way to avoid the policyholder from being burdened with having to pay the premiums in case of a job loss due to a disability or a critical illness but still have coverage under the policy benefits. The rider comes in two variants and you can include them in your base plan as per your requirements. The two variants are waiver of premiums on accidental total and permanent disability and waiver of premium on critical illness.

5. HospiCare Rider

   This term insurance rider pays a specific percentage of the base sum assured to the policyholder in case of their hospitalization. In case the policyholder is admitted into the ICU the hospitalization percentage payout is usually doubled. This payout can help individuals take care of their hefty medical bills and focus on their speedy recovery. You should go through the policy details and its terms and conditions as there are often some limitations to this term rider.

6. Terminal Illness Rider

   In case the policyholder is diagnosed with a terminal illness benefits, this term insurance rider pays the entire sum assured or a part of the sum assured to the policyholder to take care of the medical costs and treatments. This can help the policyholder ensure that they receive the best medical care and since the sum assured would be paid in advance, the policyholder can decide how they want the benefit payout to be used.

Should I Buy Riders with Term Insurance?

Buying riders with term insurance can be a smart move to get extra protection. Term Insurance Riders are add-ons that you can include in your term insurance policy to cover specific needs, like critical illness or accidental death. For a small increase in your premium, riders can offer valuable benefits, such as a payout if you're diagnosed with a serious illness or if an accident leads to death or disability. This can provide financial security and peace of mind, ensuring that your loved ones are supported in unexpected situations. Before adding riders, consider your needs, budget, and existing coverage to make sure you're making the best choice for your family.

Why Should You Buy Term Insurance Riders?

Riders are valuable add-ons to your term insurance plan that offer extra protection. Here’s why they’re important:

• Riders can enhance your current plan by covering unexpected situations that might cause serious financial strain, ensuring you always have a safety net.

• A critical illness rider can help pay for the expensive treatment of serious diseases, protecting your savings and keeping your daily life and future plans on track.

• In the event of an accidental death, riders can provide additional financial support to you and your loved ones, offering better overall protection.

Points to Remember About Term Insurance Riders

Here is a list of key points to remember you should know before adding the important term riders to your base plan.

• Term riders are often optional but as per the plan details can also be inbuilt

• Term insurance riders provide coverage as per the policy’s terms and conditions

• Term life insurance rider premiums are much lower than the base premiums for the policy

• Term plan rider coverage tenure cannot exceed the policy’s tenure

• The term riders can be added either at the time of policy purchase or at the policy anniversary as per the policy details

• Term plan riders can help provide peace of mind with their extended coverage

Final Thoughts

Adding the most suitable term insurance riders to the base plan can prove to be very beneficial for you. You should go through the list of term riders available in each plan while comparing online and purchase the plan with the most comprehensive coverage. 

Note: Check out the best term insurance plan in India and choose one that suits your requirements.