Most people buying term insurance tend to focus on the amount assured and the premiums when they're trying to get the most reasonably priced plan. However, with term policies today, there's a huge range of add-ons or riders, from critical illness cover to accidental death benefits, which enhance the policy’s core purpose.

However, adding these features will increase the overall cost of your policy. So, let’s analyse how beneficial add-ons are in term insurance and whether they align with your financial goals.

Riders or add-ons in term insurance are additional benefits offered with the term insurance plan that improve the base policy. Such variations facilitate a situation whereby policyholders can fix their insurance according to their line of preference and requirements within a given period and possibly at an extra cost.

Common add-ons offered by most term insurers include:

1. Accidental Death or Disability Benefit

This rider offers an additional payment in the event of the insured’s accidental demise or impairment.

Rahul, a 35-year-old software engineer, bought this rider for his term policy. The rider paid a lump sum after a car accident, which left the man disabled for the rest of his life. This assisted him in paying his medical bills and feeding his family as he got used to the new way of life that he never anticipated.

2. Critical Illness Benefit

This add-on pays the insured the accident benefit once the critical illnesses are diagnosed.

Priya, a 40-year-old teacher, was diagnosed with breast cancer. Her critical illness rider paid up a significant amount, enabling her to undergo further treatment without it taping her financially. The payout compensated for her lost earnings during recovery.

3. Waiver of Premium Rider

This rider excludes future premiums if a critical illness or disability from an accident is diagnosed while continuing the life policy.

Amit, a 45-year-old business owner, was hospitalised after a severe stroke. Thankfully, his term policy included a waiver of premium rider, keeping it active even when he couldn't work or pay premiums. This also ensured his family would still receive the sum assured if anything happened to him.

This rider excludes future premiums if a critical illness or disability from an accident is diagnosed while continuing the life policy.

Amit, a 45-year-old business owner, was hospitalised after a severe stroke. Thankfully, his term policy included a waiver of premium rider, keeping it active even when he couldn't work or pay premiums. This also ensured his family would still receive the sum assured if anything happened to him.

Comprehensive Coverage

Affordability

Flexibility

Tax Benefits

Convenience

Term insurance add-ons enhance the core policy element while giving policyholders more ways to manage their risks. They can be added at the time of buying the policy and at the time of policy renewal to provide a choice to switch depending on changes in life circumstances.

Each add-on functions with its particular activators and methods of reward. For instance, a critical illness rider activates upon diagnosis, offering a one-time payout alongside the death benefit. An accidental disability rider provides instalments to cover lost income, while a waiver of premium rider keeps the policy active without further payments from the policyholder.

The great thing about these add-ons is that they are easily manageable and offer insurers a way to accommodate a range of coverage types without necessitating the creation of entirely new products for each variation of coverage presented.

1. Comprehensive Coverage

2. Cost-Effectiveness

3. Customisation

4. Financial Flexibility

5. Future-Proofing

6. Family Security

7. Policy Continuity

While term insurance add-ons offer valuable benefits, choosing them requires wisdom rather than picking good options for everybody. These add-ons must be relevant to your unique life situation, risk tolerance level, and financial objectives.

The following things need to be considered:

• Those working in risky careers such as aviation or mining or those who frequently travel may benefit a lot from accidental death and disability riders. On the other hand, those who lead relatively low-risk lives may not get as much value out of such extras.
• Decisions for critical illness riders should be made based on your health and family medical history. This add-on could be helpful if you were pre-diagnosed with certain conditions based on your genetic makeup. Others also include financial responsibilities.
• Consider child support benefit riders if you have children.
• People with large debts might need to take income benefit riders to care for their families.
• It is also essential to consider factors such as age and life status. Policyholders in their early stages of life may also need life-stage benefit riders to ensure that coverage increases with responsibilities and income.

You must ensure that each rider reflects your scenario appropriately. The best time to add these features is usually when one is young and healthy, which attracts lower rates or premiums.

1. Individual Needs Assessment

2. Cost-Benefit Analysis

3. Occupation and Lifestyle Risks

4. Financial Obligations and Family Needs

5. Long-term Perspective

6. Policy Integration