Should You Buy Add-ons With Term Insurance Plan?

A term life insurance policy remains a preferred choice as it is simple, easy to understand and cost-effective.

Why a Term Insurance Plan?

A term life insurance policy will help you to safeguard your family's financial future against any unfortunate incidents. This could be the untimely death of the primary earning member of a family. 

A term insurance plan might seem like a basic insurance plan from the surface level, however; features and benefits make it an important buy to secure the future of the family. 

The term life insurance policy provides a death benefit. This means that in case of the sudden demise of the policyholder during the policy tenure, the nominee/ dependents are entitled to receive the sum assured in the form of the 'death-benefit. The term insurance coverage will help the family to meet their financial needs. 

A term insurance plan also offers options of rider benefits by paying an additional premium amount. Some riders might be included in the term plan already; however, some riders might need to be bought separately. 

In this article, let us understand the various term insurance add-ons that would enhance the protection of the term life insurance policy.  

What is an Add-on?

The add-ons are referred to the rider benefit options in a term insurance plan. The term insurance add-ons provide the policyholder with enhanced term insurance coverage. It is like additional security to the plan by paying an extra nominal premium. 

Why Term Insurance Riders?

Life is uncertain and an eventuality does not come with prior notice. Having the right term insurance add-ons will be more beneficial. Buying a term insurance rider is easy and remains hassle-free. There are different types of riders associated with the term life insurance policy.  

Let us understand the following term insurance riders briefly: 

1. Waiver of Premium Rider

   A disability might lead to limitations in the finances wherein the policyholder might not be able to pay the premiums for the term completely. Under such a circumstance, normally the policy will get expired and with no benefit. However, with this rider in place, the premiums will be waived off in case of a disability while the policy is active.

   Key Facts

   • With the help of this add-on, your policy remains active.
   • After adding this rider to the basic term plan, do not worry about paying future premiums. 
   • It is suitable for individuals who survive on a risky lifestyle where accidents are bound to happen.

2. Accidental Death Rider

   As we all know, life is all about uncertainties. In case you are the only breadwinner of the family then it is important to secure the financial future of the family. This is important as even if you are not around, the family need not struggle financially. If you buy a basic term insurance plan it only provides the family with the death benefit i.e. the entire sum assured. However, if you add an accidental death rider it will offer your family an additional sum assured if the policyholder passes away because of an accident.  

   Key Facts 

   • This applies only in the case of an accident.
   • Premiums are low because the rider covers the untimely demise of the insured due to an accident.
   • This add-on is suitable for those who frequently travel or work in life-threatening conditions.
   • The nominee is supposed to receive the sum assured if the policyholder dies within the 3 months of an unfortunate accident.
   • The policyholder can enjoy the fixed premium during the whole policy tenure.

3. Critical Illness Rider

   In the times we are living in today, the majority of the population suffers from critical diseases like cancer, heart issues, kidney problems, etc. The medical expenses can easily eat up your savings if one has no financial backup to meet any sudden medical expenses. You can remain stress-free if you add a critical illness rider to your basic term life insurance policy. This term insurance add-on can compensate with the lump sum amount when diagnosed with any medical ailment that has already been pre-specified in the policy. 

   Key Facts 

   • Carefully read the document to understand what diseases and ailments are in this rider.
   • Unlike health insurance, this rider covers the cost of critical illnesses. 
   • The premium remains the same throughout the policy tenure.

4. Permanent and Partial Disability Rider

   An eventuality can happen at any point in time. Sometimes an accident might lead to a permanent or partial disability. In case the policyholder faces any such thing the family might be left in a lurch. With the help of this rider, you can safeguard your family's future against any such unfortunate events of life. This term insurance add-on will cover the risk and substitute the income for the future of the family.  

   Key Facts 

   • It will only be considered valid if the policyholder gets permanently or partially disabled due to an accident.
   • In the case of permanent disability, you will receive the entire sum assured; in the case of partial disability, you will receive the partial sum assured.
   • The terms and conditions of this add-on vary from one insurance company to another.

5. Accelerated Death Benefit Rider

   Your family must be bearing huge medical expenses if suffering from any terminal ailments.  With this rider benefit, you will get a partial amount of the sum assured if you fall severely sick. If the policyholder has less than twelve months to survive then the advance payment can be simply used for the expenses towards the treatment required to stay alive. The remaining sum will be paid to the dependents that would help them to survive.

   Key Facts 

   • With the help of this rider, you can use the one-time lump-sum amount out of the assured death benefit in advance.
   • This is a cost-effective add-on. 
   • This will accelerate the financial benefits to support you and your family, especially during your last times and of course after your demise.

6. Income Benefit Rider

   With the help of this rider, you can ensure regular income for your dependents in your absence. In case of a sudden demise, the nominee will receive the additional income for the coming 5-10 years in addition to the sum assured amount.

   Key Facts 

   • The dependent family will receive a certain percentage of the sum assured.
   • This rider is suitable for individuals who are the sole breadwinners of the family.

Wrapping it Up

Before you decide to buy any add-ons with term insurance, it is important to understand the riders. The rider benefit options will vary from one insurer to the other. Regardless of the rider you select, make sure to read and re-read the terms and conditions before choosing one. The riders will help to boost the term insurance coverage.

Choose the term insurance add-ons wisely as it would provide the extra firepower to the term insurance plan. Let your family remain in peace even if you are not around.