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How to Increase Coverage with Term Life Insurance Riders?
In case you are the only earning member in your family, availing of a term life insurance plan can be one of the best ways to provide financial coverage to your dependents in case of your unfortunate demise. However, such policies do not offer coverage for all types of situations that can threaten the financial security of your loved ones.
Thus, insurers allow you to avail riders to enhance the coverage of your term insurance policy. Wondering how to increase coverage with life insurance riders?
Keep reading for a comprehensive insight!
Table of Contents
What is Rider in Term Life Insurance?
Riders are optional benefits that you can add to your term life insurance policy to increase its coverage. They come at nominal costs, usually 5% to 10% of the base policy, and can provide additional coverage over and above your base term insurance plan.
Generally, insurers recommend you add riders to your term plan when buying a policy. However, you can always opt for them later on when renewing your plan.
Common Types of Riders in Term Insurance to Increase Coverage
Following are some of the common types of riders that you can use to enhance coverage for your term insurance plan:
1. Accidental Death Benefit Rider
Accidental Death Benefit Rider provides additional sum assured to the beneficiaries in case of the holder’s death within the policy period in an accident.2. Critical Illness Rider
Critical Illness Rider offers a lump sum payout to the policyholder in case they are diagnosed with critical illnesses like cancer, kidney failure, heart disease, etc.3. Waiver of Premium Rider
Waiver of Premium Rider cancels all future term life premium payments in case the policyholder becomes permanently disabled in the event of an unfortunate accident within the policy tenure.4. Income Benefit Rider
Income Benefit Rider enables the nominees to receive regular income equal to the policyholder’s monthly earnings in case of the latter’s demise within the policy period.5. Hospital Cash Riders
Provides a lump sum payout in case the insured individual gets affected by a medical emergency within the policy period that requires hospitalisation.6. Surgical Care Rider
Covers hospitalisation expenses in case the policyholder needs to undergo medical surgery within the policy period.Additional Riders in Term Insurance for Comprehensive Coverage
Here are some additional riders that you can avail of to increase the coverage of your term insurance policy:
1. Disability Income Rider
Offers regular income if the policyholder cannot work due to permanent disabilities.2. Child Term Rider
Enables the policyholder to get financial coverage in case of the unfortunate death of their children within the policy tenure.3. Spousal Rider
Provides financial coverage if the insured individual’s spouse passes away during the policy period.4. Long-Term Care Rider
This policy enables the policyholder to use part or all of the death benefit for long-term care activities like nursing home care, adult daycare, etc., while they are still alive within the policy period.How Term Insurance Riders Enhance Policy Benefits?
Riders help improve term life insurance policy benefits in the following ways:
Enhance Policy Coverage
By availing riders, you can gain financial coverage for those scenarios which do not come under your term insurance policy. For instance, you can get a critical illness benefit rider with your term plan to gain a lump sum payout if you are diagnosed with a critical disease, a situation not covered under your basic term plan.Offer a High Level of Flexibility
Term life insurance riders also enable you to choose benefits based on your unique requirements. Thus, you can select riders that best align with your use case and customise your policy accordingly.
For instance, if your profession requires you to spend significant time travelling on roads, you can opt for an Accidental Death Benefit Rider. Meanwhile, if you are the only earning member of your family, you can go for an Income Benefit Rider to serve as income replacement in your absence.
Come at Affordable Prices
Riders in term life plans come at cost-effective prices. Initially, you may feel that they are increasing your premium amount. However, they are much cheaper than purchasing a separate insurance plan to cover those areas that do not fall under your term policy.Provide Tax Benefits
Section 80C enables you to avail tax deductions up to ₹1.5 Lakh within a financial year on your term insurance premium payments, including the riders. Moreover, you can get tax benefits up to ₹25,000 (₹50,000 for senior citizens) under Section 80D on your critical illness rider premium payments.FAQs about Increased Coverage with Term Insurance Riders
What is a rider in term life insurance?
A rider in term life insurance is an optional benefit that provides additional coverage over and above your basic policy. You can avail of them at nominal costs when buying an insurance plan or at the time of renewal.
How do insurance riders increase coverage?
Riders enhance term insurance policy coverage by providing financial protection against circumstances not included in the base plan. For instance, a critical illness rider enables the insured individual to gain a payout if diagnosed with a critical disease within the policy tenure, an aspect not covered by the basic term plan.
What are the most common types of riders available for life insurance?
Some of the most commonly available life insurance riders are those with accidental death benefits, critical illness riders, waivers of premium riders, income benefit riders, hospital cash riders, and surgical care riders.
How does the accidental death benefit rider work?
The accidental death benefit rider provides the nominees with an additional payout in case of the policyholder’s unfortunate death within the policy period in the event of an accident.
What is a critical illness rider, and how can it help?
By availing a critical illness rider, policyholders can avail a lump sum payout in case they are diagnosed with life-threatening diseases like cancer, kidney failure, heart disease, etc., within the policy period.
Can I add a waiver of premium rider to my existing policy?
No, you can only add a waiver of premium rider to your policy at the time of purchase. Also, its coverage and tenure must not exceed the basic policies.
What is the difference between a term rider and a standalone policy?
A term insurance rider is an additional benefit that offers extra coverage over and above your basic policy. Also, they come at affordable prices. Meanwhile, a standalone policy is a separate insurance plan that offers higher flexibility and broader coverage than a rider, albeit at a higher cost.
How do the income benefit riders support beneficiaries?
Income benefit riders provide nominees with a regular income almost equal to the policyholder’s monthly earnings in case of the latter’s unfortunate death within the policy period.
How do term life insurance riders work?
Term life insurance riders provide additional coverage in areas not covered by your basic insurance plan. They come at nominal extra costs that are added to your premium amount and can be added at the time of policy purchase or renewal.
Is it a good idea to add riders with a term insurance plan?
Yes, adding riders to a term insurance plan can be an excellent idea. They enable you to enhance the coverage of your existing plan without incurring the expenses of purchasing another standalone policy.
What should you consider when comparing multiple term insurance quotes?
When comparing multiple-term insurance quotes, you should consider factors like the sum assured, riders or add-ons, policy tenure, terms and conditions, exclusions, the insurer’s reputation, and their claim settlement ratio.
Why is the claim settlement ratio of an insurer important when evaluating a quote?
The higher the claim settlement ratio, the more likely the nominees will get the policy coverage when filing a claim. Thus, if you have to opt for a slightly higher quote to get a term plan from a reputed insurance company with a high claim settlement ratio, you should consider going for it.
Where can I find term plan quotes?
You can find term plan quotes online by visiting the websites of your preferred insurers. In case you want to search offline, you need to contact the agents of different insurance companies.
Why should I compare multiple term plan quotes?
You must consider comparing multiple term plan quotes as it enables you to avail a policy that aligns the best with your insurance coverage needs while staying within your budget.
Can I get term plan quotes for free?
Yes, you can get term plan quotes for free by visiting your preferred insurer’s website.
How to evaluate term insurance quotes?
You should consider term plan quotes based on the sum assured, riders or add-ons, policy tenure, exclusions, terms and conditions, and the insurer’s claim settlement ratio.
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Disclaimer
- This is an informative article provided on 'as is' basis for awareness purpose only and not intended as a professional advice. The content of the article is derived from various open sources across the Internet. Digit Life Insurance is not promoting or recommending any aspect in the article or its correctness. Please verify the information and your requirement before taking any decisions.
- All the figures reflected in the article are for illustrative purposes. The premium for Coverage that one buys depends on various factors including customer requirements, eligibility, age, demography, insurance provider, product, coverage amount, term and other factors
- Tax Benefits, if applicable depend on the Tax Regime opted by the individual and the applicable tax provision. Please consult your Tax consultant before making any decision.
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