Broaden your life cover with a rider
Riders are a life insurance product, which when attached to a policy enhances the scope of the life insurance cover.
Rajesh Sud
I am often quizzed by friends who are not in the insurance business on how come insurers never have offers on policies the way there are offers on credit card spends or discounts offered on loans and more. We all easily get drawn by the more for less signage that one comes across at stores, be it when buying books, shirts or even when ordering food at a fast food joint. Deals often lead us to indulge on a third book which we may never read or a shirt in a colour that one may postpone wearing. I retort friends with such examples justifying why insurers do not offer deals but that does not mean life insurers do not offer �more for less�. Riders is one such life insurance offering. This life insurance product when attached to a policy enhances the scope of the life insurance cover. Simply put, riders are options that allow you to increase your life insurance cover, qualitatively and quantitatively. In fast-food parlance, they are the toppings you add to your base pizza of choice in order to elevate its taste. And as with toppings, riders are entirely optional and are available in a variety of flavours, to be mixed and matched based on one's preferences. And each comes with a small additional cost. Riders are one of the most customer-friendly clauses introduced with a life insurance policy.For a small additional cost, riders allow you to customise your policy to match your needs as they cover risks that are fairly unique to an individual. And the premiums on riders are low because they don't have to factor in the costs such as underwriting expenses and set-up charges. Riders are pure protection products and thus no bonus is paid on it. In other words, riders provide low-cost pure risk cover which offering flexibility of choice. All you need is to attach a rider to the basic insurance policy at the time of its purchase, be it a whole life or an endowment plan for its benefits to get added to your life insurance policy.Take for instance the sole breadwinner in the family, meets with an accident resulting in temporary disability. If it forces him to stay away from work during the period of recovery, the life cover will not make good the loss of income. This is where a personal accident rider covering temporary disability could come to the family's rescue in which the policy provides monetary compensation to the insured, subject to the terms and conditions mentioned in the insurance contract.Similarly, for a policyholder diagnosed with a critical or terminal illness, the life insurance cover can provide little relief as it is not capable of preventing the drain on finances during the treatment. A dread disease rider could come in handy in such times. The illnesses generally covered under this rider include cancer, kidney failure, paralysis, bypass surgery, major organ transplant and so on. The sum assured under the rider is paid upfront as a lump-sum to the policyholder. Therefore, even if you have a health insurance policy in place, this amount can help meet other expenses or act as succour if the insured is unable to resume work during the period.These are just some of the strategies that one can adopt with riders to enhance and add value to your life cover. There are several other options such as a level term cover rider which provides you the option to increase your risk cover for a limited period and offers death benefit alone, and addresses a need for extra protection for a specified period, such as a time when you're carrying large debt and wish to insulate your dependents. There is also the waiver of premium rider which gets activated in the event of a person becoming completely disabled or losing his livelihood because of unemployment owing to an injury or sickness. In that case, the premiums due on the base policy (and other riders, if any) are waived till the person is able-bodied and employed again.There are also riders that guarantee future insurability or riders that allows you to be part of future bonuses and more. What all this means is that using these features, you can enhance your life cover, qualitatively and quantitatively, and bring it in line with your needs. While these are all add-on benefits with a life insurance policy; riders offer great value to the policyholder at a marginal cost which is a lot more than the freebee that one gets at a sale. Riders when used in the right way will let you get the most bang for your life insurance buck.It is time for you to call up your life insurance provider to add additional flavour, through riders toppings, to your life insurance pizza. And remember next time when you call up for pizza delivery, don't agree to their standard offerings because if you are ready to exercise choice in decisions impacting your life, how can you agree for less in decision related to your palate.Rajesh Sud is the CEO and MD of Max New York Life Insurance. Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
