ULIP Plan Riders

ULIP or Unit Linked Insurance Plans provide rider benefits. They are provisions that enhance the coverage of your ULIP Plan. These riders are additional features that policyholders can opt for to enhance the coverage of their ULIP plans. They come at an extra cost, and the specific riders available may vary among insurance companies.

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Top ULIP Funds
Fund Name
AUM
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1,772 Cr
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23.15%
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27.3%
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23.76%
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15.16%
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18.97%
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Fund Name
AUM
Returns (in %)
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10 Year
11,839 Cr
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21.83%
Returns
23.81%
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Fund Name
AUM
Returns (in %)
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5 Year
10 Year
247 Cr
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11.88%
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13.92%
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11.99%
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352 Cr
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12.26%
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11.38%
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526 Cr
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9.79%
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10.72%
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837 Cr
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11.67%
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10.23%
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22 Cr
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12.6%
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11.89%
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10.17%
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Fund Name
AUM
Returns (in %)
3 Year
5 Year
10 Year
494 Cr
Returns
16.43%
Returns
17.28%
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15.3%
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242 Cr
Returns
6.94%
Returns
7.91%
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8.81%
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786 Cr
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5.4%
Returns
6.88%
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8.1%
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302 Cr
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5.86%
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6.8%
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7.79%
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465 Cr
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6.93%
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What are ULIP Plans?

Unit Linked Insurance Plans (ULIPs) are financial products that combine insurance coverage with investment opportunities. These plans offer policyholders the dual benefit of life insurance protection and the potential for wealth creation through investment in a variety of funds.

When an individual purchases a ULIP, a portion of the premium goes towards providing life insurance coverage. At the same time, the remainder is allocated to different investment funds such as equity, debt, or a combination of both. Policyholders have the flexibility to switch between these funds based on their risk appetite and financial goals. The performance of the underlying funds directly impacts the returns on the investment. ULIPs thus provide a unique blend of insurance and investment, allowing individuals to tailor their financial strategy according to their preferences.

What Are the Riders in ULIP Plans?

Riders in ULIP plans are add-on benefits you can purchase on top of your basic coverage. They provide additional protection for specific risks or situations, enhancing your overall ULIP plan's value and tailoring it to your needs.

Important Points to Consider:

    • Rider availability and coverage vary between insurers and plans.

    • Riders come with additional costs, impacting your premiums and investment returns.

    • Carefully assess your needs and budget before choosing riders.

    • Understand the terms and conditions of each rider before adding it.

    Choosing the right riders requires careful consideration. Consult a financial advisor like Policybazaar to understand your needs, analyse available options, and choose riders that best complement your ULIP plan and financial goals.

    What are the Different Types Of Riders Available under ULIP Plans?

    1. Accidental Death Rider

      The Accidental Death Rider provides an extra layer of protection in the event of the policyholder's demise due to accidental injury while the policy is active. For example, if the policyholder has a sum assured of Rs. 5 Lakhs and an Accidental Death Benefit Rider of Rs. 50 Lakhs, the nominee would receive both the ULIP death benefit and the accidental death rider benefit in case of accidental death.

      In the scenario where the fund value is Rs. 3 Lakhs, and the sum assured is higher, the nominee receives the sum assured amount as the death benefit - in this case, Rs. 5 Lakhs. It's essential to note that most insurers only pay the rider benefit if the death occurs due to accidental injury within a specific period, typically around 180 days after the accident.

    2. Waiver of Premium Due To Critical Illness Rider

      This rider comes into play when the policyholder is diagnosed with a critical illness specified in the policy document. Upon notifying the insurance company of the diagnosis, all future premiums for the ULIP are waived off. The policyholder can retain the base policy coverage until the end of the policy term.

      For instance, if a policyholder has a ULIP with an annual premium of Rs. 1 Lakh and a Waiver of Premium due to a Critical Illness Rider of Rs. 50 Lakhs, and if they are diagnosed with cancer in the 18th policy year, the insurer will waive off the premiums for the remaining two years, allowing the policy to remain active until the end of the term.

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    3. Waiver of Premium Due To Disability Rider

      Similar to the Critical Illness Rider, the Waiver of Premium Due to Disability Rider waives off premiums in the case of permanent disability resulting from an accident. The policyholder continues to enjoy the base policy coverage until the end of the policy term without the obligation to pay the remaining premiums.

      For example, if a policyholder has a ULIP with an annual premium of Rs. 75,000 and a Waiver of Premium due to Disability Rider of Rs. 30 Lakhs, and they become permanently disabled in the 7th policy year, the insurer will waive off the premiums for the remaining three years, ensuring the policy remains active with all benefits intact.

      People also read: What is ULIP

    4. Permanent/Partial Disability Rider

      Provides income or lump sum if the policyholder suffers permanent or partial disability due to accident or illness.

    5. Family Income Benefit Rider

      Offers regular income to the family for a specific period in case of the policyholder's death.

    What are the Benefits of Riders in the ULIP Plan?

    Choosing ULIP Plan riders offers added benefits like:

    1. Efficient and Convenient

      • Enhances coverage seamlessly.

      • Simplifies the overall insurance experience.

    2. No Extra Medical Tests

      • Exemption from additional health assessments.

      • Provides convenience and avoids intrusion.

    3. No Additional Documentation

      • Streamlined process with no extra paperwork.

      • Saves time and ensures a hassle-free experience.

    People also read: ULIP Calculator

    What are the Drawbacks of ULIP Plan Riders?

    While ULIP riders offer additional benefits, they also come with drawbacks you should consider before adding them to your plan:

    • Limited customization: Customization options for riders might be limited, restricting your ability to tailor them perfectly to your needs.

    • Confusing terms: Rider features and benefits can be complex and confusing, leading to misinterpretations or choosing unsuitable options.

    • Surrender penalties: Early surrender of a ULIP with riders can attract higher surrender charges compared to a plan without riders.

      FAQ's

      • What types of riders are available?

        There are riders for protection (critical illness, accidental death), investment (guaranteed maturity), and more (child support, hospitalization).
      • Do riders cost extra?

        Yes, riders increase your premiums. Weigh the benefits against the cost before adding them.
      • What is the term rider?

        An add-on to a base insurance policy (e.g., term, ULIP) that provides extra benefits for a specific period (e.g., critical illness, accidental death).
      • What are rider charges?

        Rider charges are additional costs added to your premium for choosing riders.
      • Should I consult someone before adding riders?

        Yes, a financial advisor can help you assess your needs and choose the best riders for your ULIP plan.

      *All savings are provided by the insurer as per the IRDAI approved insurance plan.
      *Tax benefit is subject to changes in tax laws. Standard T&C Apply
      ^The tax benefits under Section 80C allow a deduction of up to ₹1.5 lakhs from the taxable income per year and 10(10D) tax benefits are for investments made up to ₹2.5 Lakhs/ year for policies bought after 1 Feb 2021. Tax benefits and savings are subject to changes in tax laws.
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      ^^The information relating to mutual funds presented in this article is for educational purpose only and is not meant for sale. Investment is subject to market risks and the risk is borne by the investor. Please consult your financial advisor before planning your investments.

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