How add-ons can enhance your life insurance protection coverage

Can critical illness and accidental death riders bolster your protection coverage?

Life insurance caters to the core needs of society - those of financial protection, wealth creation, and permanent guaranteed retirement income.

A term insurance or pure protection product acts as an income replacement tool for the family in case of the loss of the earning member. Long-term savings products facilitate a disciplined investment approach to wealth creation and achieve financial goals. Finally, annuity products provide guaranteed permanent income to retirees.

Innovation in the life insurance industry has resulted in designing value-added benefits called ‘riders’ or ‘add-ons’ which provide benefits over and above those offered by the base life insurance policy.

These optional add-ons help secure your financial goals against any disruptions.

Critical illness benefit

This add-on cover offers customers health and life insurance protection benefits. As part of such plans, life insurers cover critical illnesses such as heart attack, angioplasty, brain surgery and cancer, including women specific cancers such as ovarian, cervical and breast.

For instance, a 30-year-old non-smoking male customer can purchase a critical illness benefit of Rs 50 lakh for an additional premium of, say, Rs 1,399 per month for a policy tenure of 30 years. For the same tenure and benefit, a 30-year-old non-smoking female will have to pay a premium of just Rs 977 per month.
So, if a customer has opted for a critical illness cover of Rs 50 lakh and is diagnosed with an ailment covered under this benefit, a lump-sum pay out of the entire amount is made. With money in hand, the customer needn’t worry about disturbing the family’s savings and can instead focus on getting the best treatment. More importantly, the life cover component of the policy continues.

With medical inflation being approximately 14 percent, it makes financial sense to opt for this benefit. For instance, the cost of chemotherapy can be as high as Rs 25 lakh, not to mention the cost of rehabilitation, which is usually a long-drawn process requiring regular medical intervention.

Also read: Critical illness standalone covers or riders: Which one to pick?

Accidental death benefit

Reports indicate that India has the highest number of fatalities in road accidents. As per the latest available statistics released by the Union Ministry of Road Transport and Highways, the year 2023 witnessed an increase of 11.9 percent in road accidents in the country.

The accidental death benefit enables customers to enhance the sum assured or life cover amount. By paying just, say, Rs 300 per month both, a 30-year-old non-smoking male and female customer can enhance their life cover by Rs 50 lakh. For instance, if a customer with a life cover of Rs 1 crore passes away due to an accident, then the nominee will receive a claim amount of Rs 1.5 crore.

With a nominal additional premium, customers can significantly enhance their life cover and ensure the financial security of their loved ones in case of an eventuality.

Also read: Should you take an accidental death benefit rider with your life insurance policy?

Waiver-of-premium rider

This add-on benefit can ensure the long-term financial goals don’t get disrupted in case the customer is permanently disabled due to an accident. In such a case the customer doesn’t have to pay the premiums, as all future premiums are paid by the life insurance company, ensuring the customer continues to enjoy all benefits of the policy.

So how much does a waiver of premium add-on benefit cost? For instance, if the monthly premium for a policy is Rs 10,000, it will cost a 30-year-old non-smoking male Rs 110 per month as premium outgo while a 30-year-old non-smoking female will have to pay Rs 116 to purchase this add-on benefit for a policy tenure of ten years.

If an individual is regularly saving towards building a retirement fund and unfortunately is permanently disabled due to an accident, this would mean loss of regular income and the disruption of the financial savings plan. However, the waiver of premium add-on benefit will ensure all premiums are waived off while the policy continues, ensuring the financial savings plan doesn’t get compromised.

Opting for add-on benefits with life insurance products can make a difference in ensuring the financial well-being of self and family. By addressing specific needs and adapting to life changes, add-ons provide a comprehensive safety net.

Disclaimer: The views expressed by experts on Moneycontrol are their own and not those of the website or its management. Moneycontrol advises users to check with certified experts before taking any investment decisions.

The writer is Chief Product and Distribution Officer, ICICI Prudential Life Insurance.