Term Insurance Riders and their Benefits

Term Insurance policies offer financial security to the family of the insured, in case of the insured’s early death before the policy matures. Apart from providing higher coverage at lower premium rates, it offers additional privileges in the form of term insurance riders. 

A term insurance rider is an additional benefit which is completely optional and can be attached to a term insurance policy at a nominal rate, at any time. These are attached to the primary policy and offers additional benefits over and above the pre-decided sum assured as an additional financial cover. These act as the customizing features in any term insurance plan or policy and can be added or removed according to one’s needs and requirements.

What is a Term insurance rider?

A term insurance rider or simply referred to as a rider is a provision to an insurance policy that changes the terms or adds several benefits to an insurance plan. Riders provide the insured with options like additional financial coverage, or these may even limit or restrict coverage on a basic sum assured amount.

There are additional costs added to the premium amount to buy a rider. Many of these are low in costs. It is also known as an insurance endorsement and can be added to plans that cover homes, life, rental units, and autos.

Types of riders

Here are some of the very important term insurance riders made available in most term insurance plans and policies:

1. Accidental Death Benefit rider

   During the term of a policy, if the insured passes away because of an accident then this rider pays an additional sum added to the basic sum assured on the insurance policy to the beneficiaries. This additional sum is the percentage amount calculated on the policy’s sum assured. This amount will vary from insurance company to company with a fixed premium throughout the term of the policy. People who work in life-risking positions or frequently travel on work basis can add this rider.

2. Accelerated Death Benefit rider

   An individual may contract a terminal illness suddenly which may overburden his or her family with regular medication and treatment expenses. Under this benefit rider, the policyholder or his family can receive the sum assured before the policy maturity term. This will help meet the necessary treatment expenses and makes it an extremely beneficial rider at a low cost. 

3. Accidental Disability Benefit rider

   This rider is often clubbed with the accidental death benefit. This rider comes into function only if the disability is caused by an accident affecting partial or permanent disability to the insured person. The policyholders are paid in smaller amounts over 5 to 10 years of the total sum assured under this policy. It acts as a source of income in such difficult times but the payments assured are based on the terms and conditions laid down in the original policy.

   ome of the policies under the Aviva Term Plan provide riders such as the Critical Illness Rider or additional benefits like the Terminal Illness Benefit. The Riders can be purchased and added separately in place of an extra premium. Also, other benefits for Terminal Illness have various protect variations, such as the In-built Terminal Illness Benefit

4. Critical Illness Benefit rider

   Under this benefit rider, most of the major ailments and treatments are covered. A policyholder may receive a lump sum amount on the discovery of a critical illness recognized under the policy. The amount given to policyholders may decrease or increase in comparison to the sum assured. One must read all terms and conditions mentioned in the policy before purchasing it. 

5. Waiver of Benefit rider

   If a policyholder is unable to pay future premiums due to loss of income, unforeseen events or accidents causing permanent disability, this benefit rider is a cover for all premium payments until the policy expires. It enables the policy to survive even if premiums cannot be paid. Otherwise, in the absence of this rider benefit, failed premium payments disables any policy benefit when the policy expires, especially the death benefit provision.

6. Income Benefit rider

   This benefit acts as a source of income for the deceased policy holder’s beneficiary/ies. This rider is exclusive to certain policies. This rider benefit enables the policyholder’s family to receive a certain amount of income per annum for the next five or ten years along with the sum assured. 

Best Riders for Insurance Plans

These are the best of 6 beneficial riders that can be added to most insurance plans and policies:

• Accelerated Death Rider
• Accidental Disability Rider
• Accidental Death Rider
• Waiver of Premium Rider
• Income Benefit rider
• Critical Illness Rider

How to Apply a Rider to a Plan or Policy?

Adding benefit riders to policies is a way of securing the future. Thus consider a few points in adding suitable riders to policies.

Step 1: Before purchasing a policy, check what rider benefits are available with your choice of policy

Step 2: Adding riders to policy also leads to an increase in the premium amount, add these to the basic amount assured in the policy to decide based on the cover amount you seek

Step 3: Ensure that the benefit rider is taken into effect as soon as the policy has been initiated so that the benefits can be utilized before the policy matures

Step 4: Pay for the additional benefit to apply and modify the policy

Features and Benefits of a Rider

Here are the key features and core benefits of a rider:

• A benefit rider acts as an additional source of income or profit to the original sum assured in the policy
• Riders customize insurance policies
• Those wanting to keep risk covers in one place or with a single insurer, benefits riders act useful 
• It is an insurance policy provision that adds benefits to or amends the terms of basic insurance policy as an additional coverage
• These come at an extra cost, additional premium to be paid
• These come in various forms- term conversion, long-term care, exclusionary riders, and waiver of premiums 
• These can be added and removed at the policyholder's convenience 
• A policyholder need not have more than one policy to cover life, medical emergency, income, old age, etc. benefit can help cover all under one policy

Compare to Other Term Insurance Benefits

Here is a rundown to comparison to other term insurance benefits:

• Riders benefit policyholders as they do not have to maintain more than one policy at a time, thus saving time and money
• With the option to add more than one rider to a single policy one can take the benefits of all in a particular insurance plan with a little more premium amount paid 

These are flexible and beneficial to not just the policyholders but also for their beneficiaries

Things to consider while Adding a Rider

You must take the following things into consideration while adding a rider:

• One must consider benefit riders that are flexible and can be added or removed according to need
• Neither the term of the rider nor the sum assured can exceed the sum assured of the primary policy
• Is an add-on benefit you can attach to your existing term insurance policy at a nominal rate
• Riders must help meet the overall needs of the insured 
• These riders should benefit in increased savings from not purchasing a separate policy for separate needs 
• The rider will provide the insured with a cash benefit while living
• Not every policy requires an additional coverage
• A rider should not duplicate coverage

Kindly read all offer documents, terms and conditions mentioned carefully before applying any rider to any policy, and before purchasing any policy.

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