Buying Term Insurance with Riders: What you need to know

One of the most critical advantages of term insurance is that it protects your family’s future at an affordable price. Hence, irrespective of your risk preference and tolerance, it is critical to have term insurance in your portfolio. A basic plan provides specific coverage in case of the death of a policyholder. However, the coverage can be expanded by taking riders and add-ons per your requirements.

Riders are important because they provide a customized safety net to the insured. In this blog, let us explore different aspects of these riders' types and how to choose the right ones to suit your financial goals. By the end of this, you will have a clear idea about how these riders work and how you can include them in your term insurance policy.

Term insurance riders explained

Riders are optional benefits that you can opt for at the time of buying term insurance. The aim of having these riders in your term insurance plan includes additional financial protection against specific risks that may not be covered under the standard policy.

For instance, permanent disability due to an accident can not only result in significant hospitalisation costs but also mean that an individual’s future earning capabilities are almost over. Standard-term insurance might not cover such expenses, but add-on riders can help the family in such circumstances.

Some common riders you can opt for are the critical illness rider, the accidental death benefit rider, and the waiver of premium rider. We will discuss different riders in the next part of the blog.

Common Term Insurance Riders to Consider

Here are a few common term insurance riders you can consider while availing a term insurance policy:

1. Accidental death benefit rider: If your job involves a lot of travel or risks, this can be the perfect rider, where the family receives an additional sum assured in case the policyholder dies after an accident.

2. Critical illness rider: This add-on provides a lump sum payout upon diagnosing critical illnesses such as cancer, heart attack, or stroke. Having such a rider in the term insurance plan helps cover medical treatments and associated costs.

3. Waiver of premium rider: If the policyholder suffers a disability or is critically ill, all future premiums are waived. Hence, the policy remains active without causing additional strain on the family.

4. Income benefit rider: This rider provides a regular monthly income to the dependents in addition to the lumpsum payout from the base policy. If several dependents in the family rely on consistent income, you can opt for this rider.

5. Accelerated death benefit rider: Under this rider, the policyholder is paid an advance amount if diagnosed with a terminal illness. This helps meet the policyholder's medical care and personal needs and eases the family's financial burden during critical times.

Factors to consider while choosing riders

Coming back to the original example, Shreya should not simply include riders in the term policy. There are a few things which she must consider before making the decision:

1. You should be clear about your exact needs, such as personal and family financial requirements and future expenses like education, healthcare, or debt repayment. In addition, you must identify potential risks, such as critical illnesses or job-related hazards, before selecting the riders.
2. You should understand the costs associated with the riders and whether it is worth spending that much, according to your budget.
3. You should read the policy terms to understand each rider's inclusions, exclusions, and conditions.
4. Any decision you make should align with your long-term financial goals.

Summing up

Riders are designed to protect a policyholder during critical times. If you face high-risk jobs like construction or frequent travel, the accidental death benefit rider can provide added security. Further, you can opt for a critical illness rider if you have a family history of critical illness.

Once you have decided to add a rider to your insurance policy, you must know the exact inclusions and exclusions. You must ask the agent questions or contact the insurance company's customer care if you are confused about something. After all, insurance is a subject matter of solicitation, and your ultimate aim is to protect your family’s future in case of a mishap.

FAQs

What are term insurance riders?

Term insurance riders are optional add-ons to your basic term insurance policy that provide additional coverage for specific risks, such as critical illness or accidental death.

Which riders are suitable for someone with a high-risk job?

The accidental death benefit rider is ideal for individuals in high-risk jobs, as it offers extra financial protection in case of death due to an accident.

How does the waiver of premium rider work?

The waiver of premium rider waives all future premiums if the policyholder becomes critically ill or disabled, ensuring the policy remains active without causing financial strain.

Is it necessary to include riders in a term insurance policy?

Including riders depends on your specific financial needs and risk factors. They are not mandatory but can significantly enhance your coverage.