Purchasing a term insurance policy is the smartest way to give financial protection to your dependents in the unfortunate event of your death. While you need to choose the extent of coverage and the period, term insurance policies also include additional riders that you can purchase for an additional premium.
Riders are optional secondary benefits added in a life insurance policy that offer the policyholder with greater financial protection at a low premium. They are linked to the fundamental/primary policy.
Here are some of the most popular riders that come with a term insurance plan:
Accidental Death Benefit Rider
With an accidental death benefit rider, the insured can avail of an additional sum assured in the unfortunate event of an accident. The additional sum assured is determined based on the original sum assured and may vary from company to company. For this rider, the premium remains constant throughout the policy term. Some plans, however, may limit the maximum sum assured that can be availed.
Accelerated Death Benefit Rider
The family of a person suffering from a terminal illness, such as cancer, asthma, kidney failure, lung damage, etc, has to pay a significant amount of money for medical expenditures incurred in the course of the treatment. However, with accelerated death benefit riders, the family receives a portion of the sum assured in advance, which can be quite beneficial during harsh situations.
Accidental Disability Benefit Rider
If the insured suffers from partial or permanent disability due to an accident, they can benefit from this rider. If you have an accidental disability benefit rider, most term insurance policies will pay you for 5-10 years after the accident that caused your impairment. This rider, which is frequently combined with accidental death riders, can be viewed as a source of income.
Critical Illness Benefit Rider
A critical illness benefit rider allows the insured to receive a lump sum amount on diagnosis of one of the serious diseases listed in the policy document. Term insurance policies often cover cancer, stroke, paralysis, kidney failure, heart attack, and major organ transplant, among other things. Following a critical illness diagnosis, the coverage can be extended or terminated according to the terms and conditions mentioned in the policy.
Waiver of Premium Rider
As the name implies, it waives future payments if the policyholder is unable to pay them due to disability or loss of income. This way, you can ensure that your premium payments are met until the policy expires. If the insured does not have a waiver of premium rider and is disabled or otherwise unable to pay the required premium, the policy will expire and no death benefit will be given since the premiums were not paid.
Income Benefit Rider
This is another beneficial rider that can be added to a policy by paying an additional premium at the time of purchase. In the unfortunate case of the policyholder’s death, the income benefit rider can be recognised as a source of income. With this rider, the policyholder’s family can receive additional income annually in addition to the regular sum insured for up to 5-10 years.
Child Support Benefit Rider
Besides a basic term insurance policy, one of the most important riders to have is the child support benefit rider. In case the parents (policyholder) pass away, the child support benefit rider provides an extra CSB sum assured. The primary goal of the child support benefit rider is to guarantee that the child’s needs are met following the parent’s death. Furthermore, the child is able to experience different life events without having to sacrifice their life ambitions because of financial limitations.
While riders provide certain benefits, do not add them to your life insurance policy until you fully understand what they are. Additional riders should be purchased carefully and with a proper reason. Instead of adding to the cost, they should fix the problem. Additional riders might be selected depending on the specific needs of the insured.
