What are Term Insurance riders and its Benefits

Posted by Jenny Dsouza on April 20th, 2017

Every responsible person is obligated to purchase a pure protection plan for himself and his family in this era of uncertain times. Traditionally, insurance was only meant to be a protection  which family members reap in case of an unfortunate demise of the earning member of that family. So to indemnify the financial loss to the  family was the only intent of the life insurance plan. Such plans are known as the term Insurance plans. But with changing times, along with the best online term insurance plan, many other plans such as investment, child, pension plans were offered by the Indian insurer’s.

It is very essential for you to analyze your financial liabilities and financial obligations before opting for the right kind of Sum Assured and the benefits accrued to the term plan.

ID-100253875But there is an important aspect beyond merely taking a Term insurance plans. It is considered wise of you to  make your policy comprehensive by attaching the applicable benefits to your base plan. These associated benefits are known as the “RIDERS” which  will add value to your policy at a nominal charge known as “RIDER PREMIUM”. The basis of opting the right kind of riders and the number of riders depends on the size of the Family, the need of the family, inflation, cost of living, etc.

Insurance riders provide add-on  financial cover over and above the basic sum assured, for a specific contingency. These riders come into effect on the occurrence of a particular event.

These riders are clubbed with your basic term insurance plans and will give you a sigh of relief, as it will give you and your family  a protection in all kinds of eventuality in one’s life. You may opt to choose the riders as per analyzing the needs and benefits of the riders  which are narrated below.

CRITICAL ILLNESS RIDER

There are few illness which makes an individual  disabled temporarily or permanently which may result in loss of work and thereby stoppage of  family income. After such severe illness  the affected person can’t work. The treatment of such illnesses requires huge amount of money due to the high medical cost. Also, the person loses his earnings and may have to forego his savings to pay gigantic hospital bills. Such financial burden of treatment and loss of earning is indemnified by the critical illness rider. The policyholder is eligible to obtain financial benefits of being diagnosed with the critical illness. Some of the most common critical illnesses include:

  • Heart attack
  • Cancer
  • Paralysis
  • Coronary artery bypass surgery
  • Major organ transplant (e.g. Heart, lung, liver, pancreas)
  • Stroke
  • Kidney failure

The illnesses may vary from insurer to insurer. So its better to ensure to take a term plan and riders from the insurer offering maximum benefits at minimal cost.

ACCIDENTAL DEATH BENEFIT RIDER

Accidental death benefit rider provides additional financial benefits to the family in case the policyholder dies an accidental death. Usually in the early years of human  life, it is more likely that a person dies an accidental death rather than a death occurred due to illness. There is an additional accidental death Sum Assured which gets attached to your base Sum Assured. So in the event of policyholder dies out of accidental death, his family will be provided with the base sum assured of the policy plus the accidental death benefit Sum Assured as well. There are certain exclusions to this rider. It’s better to go through them before opting this rider.

WAIVER OF PREMIUM RIDER

This rider provides an assurance that your term insurance plans policy doesn’t get entitled to surrender in case you stop paying premiums due to disability or income loss. With this rider all the future premiums will get waived off by the insurance company keeping your policy in active mode as always. So in the event of death during the policy term, the beneficiary will receive the financial benefits as per the policy conditions.

INCOME BENEFIT RIDER

Term insurance plans benefits are usually paid out to beneficiaries as lump sum payout, but  in few you may have the option of allocating the financial benefits in installments to cater to the future needs of your family and to make them receive a periodic flow of income. Under income benefit rider basis your Sum assured you may decide the number of months you’d like your beneficiaries to receive payments and can decide the distribution plan which suits best for your family.

PERMANENT & PARTIAL DISABILITY RIDER

This rider is beneficial to cater to the unforeseen events apart from death like in case you face permanent disability or temporarily due to accident. In this unfortunate event you would be disabled for some time or for the remaining lifetime. It will result in loss of livelihood and stoppage of income. But in such case your term insurance plans will not be beneficial in the sense that it gives the cover amount only after your death. The disability benefit rider enables you to take benefit for this particular risk. This rider will replace your income for the specified tenure. The amount you get vary on the kind of disability. On the total disability, you will get the full sum assured where as in the case of partial disability, you will get the partial sum assured. Also,  there is an option that the sum assured is given in installments subject to the terms and conditions  which differs with the insurance company.

These insurance riders will help you to enhance and improve the complete value and effectiveness of your chosen best term plan in India, both qualitatively and quantitatively.

Source: http://www.suggestinsurance.com/blogs/what-are-term-insurance-riders-and-its-benefits/

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Jenny Dsouza

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Jenny Dsouza
Joined: November 25th, 2016
Articles Posted: 44

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