Term life insurance is opted for by people who seek a basic life cover so that they may protect their loved ones against financial distress in the future. However, term plans are known to be one of the simpler plans among all available types of life insurance. These are usually chosen when the customer seeks a simple, low-cost plan.
This makes the plan ideal for people who do not seek to spend a large premium amount for additional features they may not seek. Hence, if you are looking for a relatively simple life insurance plan, term insurance may be right for you.
However, if you are looking for slightly more from your life insurance, without compromising on the low costs, it is possible to do so with the help of riders.
What are Term Plan Riders?
Term life insurance plans offer a life cover for a limited duration. Here is how they work:
When you choose a term plan, you are expected to understand the features and functions of the plan well. Before you buy, use a term insurance calculator to get a better idea of how much premium are you expected to pay for the plan you seek.
Once you purchase a plan, you enter an agreement with the insurance provider, where you are required to pay regular premiums. On the other hand, the insurer offers you a life cover. This entails a death benefit that your nominee or beneficiary could claim if the person insured by the policy passes. Furthermore, term insurance tax benefits are also one of the pros that may motivate people to buy these policies.
Hence, term life plans are relatively simple. But they can be enhanced with the help of riders.
What are riders? Riders are add-on features that can be added to your term life insurance policy. These usually come at an additional cost and allow the policyholder to enhance their plan. Thus, adding riders to your policy can increase your premium costs, which may not reflect in the estimates given by your online term insurance calculators.
Types of Term Insurance Riders
The availability of riders may differ across plans and insurance providers. Here is a look at some of the commonly available term insurance riders you may be able to choose from.
Accidental Death Benefit Rider
If the death of the life assured occurs due to an accident (as defined by the policy document), it can be the cause of grief and financial distress to the family. Having an accidental death benefit rider allows the nominee to claim an additional benefit amount in addition to the sum assured. This can help the family address the financial issues they may be facing as a result of the sudden death of their loved one.
Accidental Permanent Disability Rider
This is a rider that comes into play when the life assured meets with an accident that results in any sort of permanent disability recognised by the policy. A permanent disability can mean a heavy financial toll on the person affected, as well as their loved ones. With this rider, the policyholder can claim a benefit in the event of a permanent disability.
Critical Illness Rider
Being diagnosed with a critical illness is commonly followed by extensive treatments and possible hospitalisations. This may end up making a dent in the savings of the individual or their family. A critical illness rider can save you against this. The rider allows the policyholder to receive a benefit if the life assured were to be diagnosed with a critical illness covered by the policy.
Premium waiver, also known as waiver of premium benefit, is a commonly available rider. Assume that you use up your accidental permanent disability rider or your critical illness rider. With the premium waiver rider, the remainder of your premiums will be waived off.
This rider allows the nominee to receive regular monthly income for a certain number of years after the death of the life assured. The number of years this rider will pay needs to be selected by the policyholder when buying the policy.
Riders are a way to get more from your term insurance. The most common reasons to buy term plans include term insurance tax benefits as well as the life cover it offers. However, know that when customised with riders, these policies have more to offer. When buying term insurance, ensure that you are well aware of all available riders and choose the ones that suit you best.