3 riders that can boost your term insurance protection

Should you term insurance rider benefits to your protection portfolio?

Term life insurance is the simplest and most affordable life insurance policy. It provides a death benefit payout on the passing of the insured person during the duration or term of the policy. Everybody must consider term insurance, as it offers crucial financial protection and ensures a family's financial security.

It can not only help the family manage its day-to-day expenses but also maintain its lifestyle even in your absence. With the right coverage, you would also be ensuring that the future needs of the family such as children's education, marriage and retirement corpus for spouse are also taken care of in your absence.

Also read: Married Women’s Property Act: What’s hers, stays hers

Determine the appropriate life cover

One of the simple guidelines for determining the appropriate coverage amount is the "income replacement" method. As a thumb rule, you should aim for a sum assured that is approximately 10 to 15 times your annual income. This calculation should consider factors such as your outstanding debt, corpus for your dependents and family's anticipated expenses while considering inflation as a factor.

It is essential to adjust your target coverage amount based on your age. Younger individuals with longer earning potential may opt for and benefit from a higher multiple of the annual income, while older individuals may need to lower their expectations based on the remaining number of working years.

When buying term life insurance, one should also consider many other unforeseen risks and be financially prepared for protection against them. For example, death and disability due to accidents or being diagnosed with critical illnesses such as cancer, heart disease and stroke.

And this is where riders come into the picture which can be purchased along with the term insurance by paying a little extra premium. That little extra cost enhances the coverage and provides additional support in case of these additional unforeseen adversities. These riders can be opted to make your coverage more comprehensive.

Here are three important riders to consider when buying a term insurance plan:

Accidental death and disablement benefit 

This add-on not only addresses the financial repercussions of an untimely death due to an accident but also provides financial assistance to the insured person in case of disablement due to an accident.

According to the Ministry of Road Transport & Highways, 1.68 lakh people died in road accidents in India in 2022.

An additional benefit amount that is over and above the death benefit under the term plan is paid to the dependents in case of accidental death.

Many times, the person becomes disabled totally or partially due to the accident and it greatly affects their earning potential. So, this rider helps maintain financial stability during such times.

It's important to note that this rider excludes deaths caused by suicide, self-inflicted injuries, substance abuse, etc. This rider is beneficial for individuals whose occupations or lifestyles expose them to higher risks such as construction workers, miners, or people who frequently travel for work.

Also read: Here's why you don't need term insurance beyond your working years

Critical illness

It provides a lump sum payout upon the diagnosis of a specified critical illness such as cancer, heart disease or stroke specified in the policy document.

This rider can be extremely useful, as the medical cost of treating such critical illnesses can be very high, thereby preventing the illness from disrupting the family's financial stability.

It is particularly valuable for individuals with a family history of critical illnesses or those who are the sole breadwinners. It provides peace of mind, knowing that if a serious illness strikes, they will have the financial resources to manage it.

Waiver of premium 

This optional cover ensures that the policy remains active even if the insured person becomes unable to pay premiums due to disability or critical illness. If the insured becomes permanently disabled or is diagnosed with a critical illness listed in the policy, this rider will ensure that you no longer need to pay the premiums but the coverage remains intact.

This rider is crucial for ensuring that the policy's benefits are fully realised even in the face of unforeseen circumstances. This rider is especially beneficial for individuals with dependents and those in high-risk occupations. It provides a safety net, ensuring that your loved ones are protected even if you are unable to fulfil the premium commitment due to disability or critical illness.

These riders allow policyholders to customise insurance coverage to address their needs and concerns. They provide comprehensive financial security and peace of mind, knowing that they and their families are protected against a range of potential risks. By carefully considering their circumstances, policyholders can choose the riders that best suit their needs.