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Life Term Insurance riders which you should be aware of

A life term insurance is the simple financial product as is that assures the financial security to the nominee or the family in case of unexpected demise of the policy holder. The simple features of 'Term only' insurances have competitive pricing, lower premium, tax benefits on premium payments and flexibility of opting out. However, with change of time there is a shift in the requirements of the investors and insurance companies are coming up with different plans for life term insurance that customize the specific requirements and cater the diverse needs of individual investors. These life term insurance plans contain certain add-ons to the base term policy. These add-ons are called 'Riders'.

Following are some of the riders which are good to consider depending on the stage of life you are in. A right selection of Rider can cover the major requirements and provide the much needed support in case of any eventuality.

  • Critical Illness Rider to the Term Plan : HThe benefit of this rider is realized if certain critical illnesses happen. Cancer, kidney failure, heart attack, paralysis, Stroke, coronary artery bypass surgery, certain major organ transplants are the type of critical illnesses that are covered by the rider. However, which diseases are covered under the rider is defined in the plan. The payment covers the much needed cost of the treatment, though the payment from the plan is lump sum and is not based on the cost of treatment.
  • Partial or Permanent Disability Rider: Life is uncertain and certain unfortunate event could lead to permanent or temporary disability. This in turn causes loss of income opportunity, incurring medical costs and financial uncertainty for the family. A disability rider would be helpful to receive money for a pre-defined period of time and the sum receivable depends on the type of disability. For permanent disability, the full coverage amount is paid while for partial disability, a partial coverage is done and the amount is determined based on the policy terms. If the term covers then the payment could be received in instalments, but this depends on the pre-determined terms of the policy.
  • Accidental Death Benefit Rider : In case the policy holder dies due to accident, then if accidental death benefit rider is there in the plan, the insurer will pay the additional amount over the sum assured. The sum assured under the regular plan as well as under this rider will be paid for accidental death. In case of death for natural causes, the payment of this rider is not applicable.
  • Waiver of Premium Rider: In case of certain events like critical illness or accidents and disability, or in case the investor lose job, the financial stability of the family comes at a stake. During these situation, payment of premium becomes an added liability and many cases impossible. For a term insurance, a lapse of payment causes the policy to be cancelled. To protect the investor from annulment of the policy, this rider for Waiver of Premium comes in benefit. With this rider being attached with the term plan, the insurance company waives the premium payment and still the policy remains valid. In case of death, the family or the nominee gets the sum assured from the term plan as per the predefined conditions.
  • Rider for Income Benefit: Under this rider, the policy holder can opt certain amount of monthly instalments for a specific duration in case of his/her untimely death. In such cases the sum assured will be distributed on a monthly basis which act as the regular inflow of money for the family and gives a better way to manage the financial needs.

Finally, if the benefits are claimed for a rider, the rider gets terminated, however, the original life insurance plan continues. The renewal provision makes the plan beneficial at the significant milestones of life where specific coverage could be added on the existing plans. While going for an additional benefit in the form of a rider, it is imperative to keep in mind that the benefits outweigh the cost of additional premium that has to be paid. And hence, the riders which might be best suited for your requirement should be opted for, like being in a risky job, you can select a Disability Rider or having a family history of certain critical illnesses might prompt to go for a critical illness rider along with your term policy and so on.

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