A step-by-step guide to adding the right riders to your term insurance plan

Think that you are building a house. A basic house with a foundation, walls, and a roof is the base plan that meets your living needs. But you can customize it further to enhance your comfort and security. For example, one may install a security system, buy an extra generator and even construct storm shelters inside this structure. Such aspects resemble “riders” for term life insurance policies that offer cover over and above the basic death benefit.

Just like with a house, you can elect riders to make your term life plan more comprehensive for your family members.

What Are Riders or Add-Ons in Term Insurance Plans?

Riders are optional add-on features you can include in your term insurance policy. When you buy a term insurance policy, you may choose to add a rider to it. These riders come at extra cost but, add value to your existing term life cover and offer additional peace of mind.

Types of Riders in Term Insurance

The WOP rider ensures you won't have to pay premiums if you become seriously ill, or disabled. This rider activates under specific conditions outlined by the insurer, allowing you to focus on recovery without worrying about premium payments.

This rider pays a lump sum if diagnosed with a critical illness. There are two types:

• Standalone Rider: Provides an additional payout on top of the base sum assured.
• Accelerated Critical Illness (ACI) Rider: It pays the rider sum assured as an advance after deducting it from the base death benefit cover in your base term plan. Your death benefit sum assured reduces to the amount paid off.

In the event of an accidental death of the insurer, this rider would come with an extra economic value attached to it. This means that should an accident claim the life of somebody who has taken out insurance for ₹1 crore against poisoning and ₹50 lakh against accidents, then the nominee will receive ₹1.5 crore.

If a physician has diagnosed a terminal illness, a certain amount of money will be given to the patient as compensation. An alternative use for this payment is covering healthcare expenses or ensuring the dependents’ economic well-being.

This rider allows you to increase your coverage upon major life events like marriage or having children. It is ideal for individuals who plan to expand their family, providing a convenient way to enhance coverage without buying a new policy.

The ROP rider refunds the premium paid if the policyholder survives the term. Although it comes with a higher premium, it offers a financial return if no claims are made during the policy term.

Why You Should Consider Term Insurance Riders

Riders offer additional benefits without the need to manage multiple policies, making coverage more streamlined and hassle-free. They are generally more affordable compared to purchasing multiple insurance policies and provide extra financial protection to your family in unforeseen circumstances, enhancing the primary benefit of term insurance. Additionally, riders, like the base term plan, are eligible for tax deductions under Section 80C of the Income Tax Act.

How to Choose the Right Riders for Your Term Insurance Plan

1. Assess Your Needs and Priorities

The first step in choosing the right riders is to assess your needs and priorities. Consider your lifestyle, health conditions, financial obligations, and future goals. Here are some questions to guide you:

• Do you have any existing health conditions or a family history of critical illnesses?
• Are you the sole breadwinner in your family?
• Do you engage in activities or work that increases your risk of accidents?
• Are you planning to get married or have children in the near future?

By answering these questions, you can identify which riders are most relevant to your situation.

2. Understand the Terms and Conditions

Every rider has its own terms and conditions which must be read and understood by any prospective buyer. For instance, the Waiver of the Premium rider might apply to a few specific illnesses or disabilities while the Critical Illness rider lists all the covered diseases. Always make sure you know the terms of each one of them including the restrictions to avoid surprises in the future.

3. Compare Costs

While riders provide additional benefits, they also come at an extra cost. Compare the premium amounts for different riders and evaluate their affordability. Remember, the goal is to enhance your coverage without straining your budget. Sometimes, combining multiple riders can be more cost-effective than buying separate policies.

4. Consider the Impact on Base Sum Assured

Some riders, like the Accelerated Critical Illness rider, can affect the base sum assured of your term plan. It is important to understand how a rider's benefits will impact your overall coverage. Ensure that the remaining sum assured is still sufficient to meet your family's financial needs.

5. Seek Professional Advice

Choosing the right insurance policy can be hard as it is more intricate than many may think. Moreover, you won’t get an easy choice without advice from an experienced insurance advisor who would give you some recommendations due to they have more knowledge in this field of practice. This expert would clarify the aspects of various riders, and make their consequences clear to you so that in the end you can choose the most appropriate ones depending on your individual circumstances.

6. Review and Update Regularly

Life is dynamic, and your insurance needs may change over time. Review your term insurance plan and riders periodically to ensure they remain aligned with your current circumstances. If you experience significant life events, such as marriage, childbirth, or a change in employment, consider updating your coverage and riders accordingly.

Final Thoughts

Choosing the right riders for your term insurance plan is crucial in ensuring comprehensive coverage and financial security for you and your loved ones. By carefully assessing your needs, understanding the terms and conditions, comparing costs, considering the impact on your base sum assured, seeking professional advice, and regularly reviewing your plan, you can make well-informed decisions.

Remember, the ultimate goal is to provide your family with the protection and support they need in times of uncertainty. Invest in riders that enhance your term insurance plan and offer the peace of mind you deserve.