What is Income Benefit Rider in Life Insurance?

What is an Income Benefit Rider?

How Does an Income Benefit Rider Work?

Features and Benefits of Income Benefit Rider

Here are some of the significant features and benefits of an income benefit rider:    

1. Guaranteed Income Stream

The income benefit rider guarantees a regular income stream to the policyholder in case of disability, illness or a situation covered under the rider. The amount of this income is decided at the policy's inception and is usually a certain percentage of the sum assured. 

This income can be used to cover day-to-day expenses or medical bills. This additional income can be a significant relief, especially during financial hardship.

2. Customizable Coverage

The policyholder can customize the coverage amount and the duration of the income benefit rider according to their needs.

They can decide the income amount and the number of months they will receive this income while buying the rider. This allows them to tailor the rider to their specific financial situation and potential needs. 

3. Tax Benefits

As with other insurance, the income benefit rider provides tax benefits, which can help the policyholder save money. The premium paid and the payout received under the rider are tax-free under section 80C and section 10(10D), respectively, as per the prevailing income tax rules.

4. Affordable Premiums

The premiums for income benefit riders are affordable and can be added to the base policy at a nominal cost. This makes it a cost-effective way to ensure financial security for the policyholder and their family.

5. No Impact on Death Benefit

The income benefit rider does not impact the base policy's death benefit. Instead, it pays out a percentage of the death benefit on a regular basis to the beneficiaries for a specified period. The policyholder's beneficiaries will receive the full death benefit even if the rider has been claimed. 

What are the Exclusions of Income Benefit Rider?

Who Should Buy an Income Benefit Rider?

Eligibility Criteria for Buying Income Benefit Rider

Documents Required for Claiming Income Benefit Rider

Factors to Consider When Buying Income Benefit Rider

FAQs About Income Benefit Rider

Is the income benefit rider only available for term life insurance policies?

No, if offered by the insurer, the income benefit rider can be added to any life insurance policy.

What is the benefit period for an income benefit rider?

The benefit period for an income benefit rider is the period during which it provides income. It varies depending on the policy and the rider. Generally, it is decided at the inception of the policy and ranges from two to five years, but some policies may offer benefits for up to 10 years.

Can I cancel the income benefit rider?

Yes, you can cancel the income benefit rider at any time. However, if you cancel the rider, you may lose the benefits associated with it.

Does the income benefit rider have a waiting period?

Yes, the income benefit rider may have a waiting period before the benefits are paid. However, it depends on the insurer, and some of them might not have it. The waiting period varies depending on the policy and the rider, but it is generally 90 days.

Can the income benefit rider be added to a group life insurance policy?

It depends on the policy, the employer, and the insurance company. Since the employer funds a group policy, some might have restrictions on adding riders to it. However, a few others might give the option to add riders. 

Who gets the Family Income Benefit Rider benefit if the life insured passes away in an accident?

As with other insurance policies, the nominee gets the family income rider benefit in case the insured passes away.

Does the Family Income Benefit Rider allow coverage if the base policy is discontinued?

The Family Income Benefit is a rider attached to the base policy. Hence, if the base policy is discontinued, the rider is also discontinued.

If the life insured passes away after becoming disabled, will the Family Income Benefit cover provide additional benefits?

No, the income benefit rider pays on disability and is terminated after that. So, if the insured passes after the disability, the rider does not pay any extra benefit.

Can I increase or decrease the coverage of an income benefit rider?

Yes, you can typically adjust the coverage of an income benefit rider. Subject to your insurer's terms and conditions, you can make changes to your rider like modify the coverage, add additional features etc.

Does income benefit rider cover only “on-the-job" injuries?

No, income benefit riders usually cover both on and off-the-job injuries, thus providing you with a larger coverage. However, the specifics may vary by policy and insurer.

Is it necessary to add an income benefit rider to my insurance policies?

Adding an income benefit rider depends on your financial security needs and risk tolerance. It's an optional rider, not mandatory but can be beneficial.