Rider Premium in Term Insurance

Let us take a look at what term insurance rider premium means, the different types of term riders available, and whether adding term life insurance riders is worth the extra cost.

What is Term Insurance Rider Premium?

In term insurance, a rider premium charge is an additional amount you pay for any extra coverage or benefits you choose to add to your base policy. Term insurance riders are optional features that enhance the protection provided by your term insurance policy. While a basic term plan provides a death benefit to your beneficiaries, riders offer coverage for specific scenarios like critical illness, accidental death, or disability.

Term insurance rider premiums are generally affordable and are calculated based on several factors, including:

• The type of term rider selected

• Your age and health at the time of purchase

• The coverage provided by the term rider

• The length of the policy term

The rider premium charge is added to the base premium of your term insurance policy, increasing the overall cost and enhancing the protection.

What are the Most Common Term Insurance Riders in India?

There are several types of term insurance riders you can add to a term insurance policy, each offering specific benefits for particular situations. Here’s a breakdown of the most common types of riders:

1. Accidental Death Benefit Rider

   This rider provides an additional payout to your beneficiaries if you pass away due to an accident. In case of accidental death, the rider offers a higher sum assured than the base policy, enhancing financial security for your family.

   • Rider Premium: The cost of this rider is generally low because accidental death is a less likely event than natural causes.

2. Terminal Illness Rider

   If you are diagnosed with a terminal illness and your life expectancy is limited, this rider offers an advance payout of the death benefit to help cover end-of-life expenses and medical treatments.

   • Rider Premium: This rider is typically low-cost because it activates under very specific circumstances.

3. Accidental Total Permanent Disability Rider

   In case an accident leaves you totally and permanently disabled and unable to work, this rider offers a lump sum payout or a regular income to help you manage your financial obligations. Total and permanent disability means the loss of two limbs that can no longer be recovered.

   • Rider Premium: The cost of this rider depends on the level of disability coverage you choose.

4. Critical Illness Rider

   The critical illness rider offers a lump sum payout if you are diagnosed with a critical illness like cancer, heart disease, or stroke. This payout can help cover medical expenses or replace lost income during your recovery.

   • Rider Premium: The premium for this rider is higher compared to others due to the higher likelihood of claims being made.

5. Waiver of Premium Rider

   This rider ensures that your policy remains active even if you are unable to pay future premiums due to a disability or loss of income. The insurance company waives all future premium payments while maintaining your coverage.

   • Rider Premium: This rider is moderately priced and can be a smart addition for those concerned about income stability.

6. Hospicare Benefit Rider

   The Hospicare Benefit rider provides additional financial support in case of hospitalization due to illness or injury. It covers daily hospital expenses, including room charges, medical tests, and treatment costs, reducing the financial burden on the insured and their family. This rider ensures that unforeseen medical expenses do not deplete savings, offering peace of mind during extended hospital stays or serious health conditions. 

   • Rider Premium: The premium for this rider is higher compared to others due to the higher likelihood of claims being made.

7. Parent Income Protect Rider

   The Parent Income Protection Rider ensures financial stability for your family in case of your unfortunate passing. It provides a steady monthly income to your beneficiaries, helping them maintain their lifestyle and cover essential expenses, such as household bills and education costs, easing the financial burden on your loved ones.

   • Rider Premium: The premium varies based on the amount and duration of the income stream you select.

8. Child Education Benefit

   Insurers like Canara HSBC and PNB MetLife Insurance offer Child Care or Child Education Benefit rider, providing financial support for your child’s education or care needs in the event of your untimely demise. It ensures that your child's schooling or upbringing continues uninterrupted, providing a lump sum payout or regular payments to cover tuition fees or other child-related expenses.

   • Rider Premium: The premium varies based on the amount and duration of the income stream you select.

What Factors Affect Term Insurance Rider Premiums?

Several factors influence how much you will pay for a term life insurance rider premium charge. These include:

• Age: The older you are, the higher the term insurance with rider premium charge will be. Younger individuals typically pay lower premiums because they are considered to have lower risk.

• Health: Your health at the time of purchasing the rider can significantly impact the premium. Individuals in good health generally pay less, while those with pre-existing conditions may face higher premiums or exclusions.

• Rider Type: Some term insurance riders, like critical illness or disability riders, come with higher premiums due to the greater likelihood of claims.

• Policy Term: The length of the policy also affects the rider premium charge. Longer-term policies tend to have higher premiums because the insurer takes on more risk over time.

• Coverage Amount: The level of coverage you choose for a term insurance with rider will directly impact the rider premium charge. Higher coverage means higher premiums but also greater financial security.

What are the Benefits of Buying Term Insurance with Riders?

Term insurance riders offer several advantages that make them appealing to policyholders:

• Cost-Effective Premiums: Instead of purchasing multiple standalone policies, adding term insurance with riders is a cost-effective way to get additional coverage at a lower premium.

• Financial Security: Riders provide financial support in unexpected situations, such as being diagnosed with a critical illness or suffering a disability, helping you manage medical costs or loss of income.

• Comprehensive Cover: Riders allow you to enhance the basic coverage of your term insurance policy, addressing specific concerns such as accidents, critical illnesses, or disabilities.

• Allows Customization: Riders offer flexibility in tailoring your policy to suit your personal and financial needs, making your insurance more relevant to your lifestyle.

• Tax Saving Benefits: Several term insurance riders, like critical illness and hospicare benefit riders, allow you to claim additional term insurance tax benefits under sections like section 80D of the Income Tax Act, 1961, as per the prevailing tax laws.

Wrapping it Up!

Term life insurance riders are an excellent way to enhance the coverage of your term insurance policy, offering flexibility and added financial security. The term insurance rider premium charge you pay is generally affordable, but it can vary depending on factors such as your age, health, and the type of rider you select. By carefully evaluating your needs and the risks you want to cover, you can decide whether adding term riders is worth the extra cost. With the right combination of term insurance riders, your term insurance can offer comprehensive protection for both you and your family.

Note: You should also check the term insurance benefits if you are planning to purchase the term insurance plan.