Different Types of Riders in Term Insurance Plans in India

Life is an uncertain journey in which you cannot predict the next step. However, you can always plan for what happens to your loved ones in your absence by having a safety net to protect them from any financial tragedy. This is where a term insurance policy comes into play. 

However, a basic term insurance policy may not be sufficient to take care of your family’s needs after your unfortunate demise. So, it’s highly advised that you purchase term insurance riders, the add-on benefits, along with a basic term insurance policy to enhance its coverage and help you ride smoothly over any unforeseen circumstances.

In this article, we will explain the benefits and the different types of riders in term insurance.

Imagine you bought a new phone you love to use, but you’re worried that if you accidentally drop it, the phone might break or get damaged. So, you get a phone cover to keep your phone safe. This is like a basic insurance policy. 

Later, you also decide to protect the screen with an additional screen guard to provide extra protection. This additional cover is like a term insurance rider that will provide additional benefit to your family in any situation.

So, while a basic term insurance policy will offer death benefits to the policyholder, adding term insurance riders will enhance the policy’s coverage by providing you additional benefits.  

Term insurance riders provide flexibility in terms of the premium amount and duration of the policy as the amount of these riders are added to the base premium of the term insurance policy. Therefore, opting for riders increases the policy’s coverage while simultaneously allowing you to customise it per your needs.   

1. Accidental Death Benefit Rider

Accidents are unpredictable, and anyone can be a victim of it. So, in such financially traumatic situations, this rider pays the supplementary sum assured to the beneficiary in case of the policyholder’s untimely death due to an accident. The sum assured is paid within 120-180 days from the date of the accident. However, the rider does not provide benefit in case of death due to suicide, self-inflicted injuries, substance abuse/overdose, and participation in riots or rebellion.

 Who should opt for it?

Individuals prone to higher life risks, such as construction and mine workers or those who travel frequently.

2. Accidental Total and Permanent Disability Rider

This type of term insurance rider will bear the financial burden of your loved ones if the policyholder suffers from permanent or partial disability due to an unfortunate accident and lose the ability to earn a living. The rider provides you with a full or partial sum assured depending on the degree of disability as a lump sum. The option to get payout in instalments is available depending upon your insurer.

Who should opt for it?

Individuals who commute daily, travel frequently, or work in high-risk jobs such as construction sites, mining sites or a manufacturing factory.

3. Critical Illness Rider

This rider protects financially if the policyholder has been diagnosed with one of the critical illnesses pre-specified in the rider and covers the high medical costs of the treatment, up to the amount of rider chosen.

It compensates the loss of earnings with a lump sum amount. The rider is active till the term insurance policy duration although its benefits can be claimed only once.

Who should opt for it?

Individuals with a family history of serious health conditions or those who are the sole breadwinners of their family.  

4. Terminal Illness Rider

If you have purchased the Terminal Illness Rider in your policy and are later diagnosed with a terminal illness wherein short life expectancy is medically confirmed, then this rider provides you with a part of the sum assured to pay for the medical expenses of the illness. The remaining amount is paid to the family after you pass away.

It is a low-cost rider that helps your family during your last days and after you pass away.

Who should opt for it?

If you have dependents relying on you for financial support, limited savings, or if you think your health insurance coverage might not be able to cover all the costs incurred due to terminal illness.

5. Waiver of Premium Rider

This type of rider in term insurance waves off the future premiums to provide financial respite to the policyholder who may be suffering from a disability or loss of income and cannot pay future premiums.

This ensures that the policy continues till maturity even in case of non-payment of premium, thus reducing your financial worries. 

However, this term insurance rider can only be availed of if the policyholder has been disabled for six months or more or has been diagnosed with any life-threatening illnesses.

Who should opt for it?

People who are more at risk of getting injured or falling ill or have dependents, and parents with dependent children.

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Note down these key things to note about term insurance rider life insurance before you add one to your basic term policy:

• You can choose term insurance riders to customise your policy. 
• Check the terms and conditions associated with different term plan riders before adding them to the base policy. 
• You can add the term plan riders when you buy the policy, while some insurance companies allow you to add riders at the time of policy renewal.
• Also, you can add the rider for less or same duration as the base policy but cannot exceed it.  

Therefore, buying term riders for an insurance policy is entirely your choice. Purchasing a rider would be highly beneficial if you want enhanced coverage over your base term insurance policy with the same insurance company.