While a rider is just as good as buying a new policy, it usually is a very economical addition to get the maximum coverage from a plan.
A life insurance policy is a must for those who have dependents like children, old parents and liabilities like home loans or EMIs. However, one should also consider customizing it according to their lifestyle, and the best way to do it is by purchasing riders or add-ons with a base policy. A pure term policy is bought to create a safety cover for your family so that in case of an untimely death of the policyholder, the family members don’t have to face a financial burden. The sum assured in a term policy is usually a bigger amount and it will take care of the expenses and bills if the earning member meets a mishap. However, when a policyholder purchases extra benefits called riders along with the main plan, the added features make the overall deal more wholesome for an individual.
While different insurance companies offer different riders and features with the main plan, some of the most common riders that are available in the market with a term plan are given below:
Waiver of premium: A lot of insurance companies provide waiver of premium (WOP) rider for policyholders to handle emergency situations. It is a rider that will waive off the future premiums if the policyholder is unable to pay annual premiums due to accidental disability or diagnosed with critical illness. For a 30-year-old non-smoker male, a WOP rider would usually cost between INR 31 to INR 49 per month as an additional charge with the main premium (charges would be different for different age profiles).
Critical illness: According to a study for the year 2016, an estimated number of deaths due to cardiovascular diseases were 3.5 lakh, 20 lakh due to lung diseases, 10 lakh due to cancer and 18 lakh due to liver diseases. A critical illness can not only raise your hospital bills but also hamper your career and disable you from earning; hence, a critical illness rider will act as an income replacement and the amount received under this can be used to meet the expenditures. This added cost of this rider will be a small addition to your regular pure term premium but it will cover you against the critical ailments mentioned in the policy document (each insurer has a different number of diseases listed under this rider, so make sure you read carefully before buying this). Buying this life rider with an insurance plan is the most economical way of protecting yourself against major life-threatening diseases such as cancer, heart attack, tumor, kidney disorders, coma and other life-threatening diseases specified in the policy.
Accidental death rider: All term plans cover accidental death under the policy, but this rider is provided as an add-on keeping in mind the beneficiaries. According to a report by the Union road transport and highways ministry, India recorded an average of 17 deaths and 55 road accidents every hour in 2016. While the statistics are around accidental deaths are alarming, and if you happen to be the only earning member in your family it becomes even more important for you to consider this rider. If you die due to an accident, the insurer will pay the nominees a total of the rider sum assured plus death benefit. Different insurance companies have different policies when it comes to rider sum assured -- it could be an amount selected by the policyholder or it will be a pre-decided default value as provided by the insurer.
The cost of this rider can vary from company to company. For example, for a 30-year-old non-smoker male for a term of 40 years, PNB MetLife Mera Term Plan with a sum assured of 1 crore will cost around INR 11,091 annually. In case, if a death due accident rider is added to this policy, the annual premium goes up to INR 11,984 as the annual cost of this rider is INR 893 per annum and a rider sum assured of INR 10 lakh is provided by the insurer. Hence, if a policyholder dies due to the accident, the nominees will receive INR 1.10 crore (death benefit plus rider sum assured).
Accidental permanent and partial disability: There are times when a simple term plan cannot do justice because an accident can lead to permanent or partial disability too. In case of an accident, when a person is unable to restore his/ her normal life back due to any kind of temporarily or permanently disability, the insurance company will either pay a lump sum amount. In some cases, premiums are waived off by the insurance company and a rider sum assured is paid to the policyholder.
It was reported in the year 2016, that half or 46.3% of the road fatalities victims were between the age-group of 18-35 years; hence it becomes even more important for young professionals to consider this rider. For example, for a 30-year-old non-smoker male for a term of 40 years, Aegon Life’s iTerm policy with a sum assured of INR 1 crore will cost around INR 9,193 annually. In case, if a disability due to accident rider is added to this policy, the annual premium goes up to INR 9,771 as the annual cost of this rider is INR 578 per annum, which gives a rider sum assured of INR 10 lakh -- a small amount to pay for better protection. Hence, if a disability occurs due to an accident, the policyholder will be getting a rider sum assured.
While a rider is just as good as buying a new policy, it usually is a very economical addition to get the maximum coverage from a plan. Different combinations of riders with a pure term insurance will not only take care of your family after your death, but a rider will also ensure that if you go through any kind of physical disability due to an accident the rider sum assured will keep you afloat in trying times.(The writer is Head of Life Insurance of Policybazaar.com)