Life Insurance Policy Riders: What Are They, Why Are They Useful?
Updated On Jun 25, 2021
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Life Insurance is the need of the hour and must be owned by every earning individual keeping in mind how uncertain life is and how it can come to a standstill at any time, to avoid financial pressures in times of emergency, life insurance acts as a boon but how do you choose a policy which gives the widest coverage?
You might be a new earner who might be planning to go for higher studies after some years or might be wanting to save money for your parents. You might be a middle-aged person wanting to save for your children’s education and marriage or you might be someone planning old age healthcare and retirement plans.
How do get all of these in a single plan? It seems impossible and if possible, it might come at huge premium costs. To avoid all these hassles of having multiple policies and the pressure of paying multiple premiums, you can opt for ‘Riders’.
What Are Life Insurance Riders?
A rider is an add-on investment or an additional plan added to the base policy which aims to increase the coverage of your insurance at cost-efficient prices. They are of different types and vary from normal health care to critical illness to accidental death or disability to funds for your child’s education and/or marriage and so on and can be added to any type of insurance plan, including term, endowment, money back, and unit-linked.
Most Common Life Insurance Insurance Riders
Insurance riders aim to increase the total cover-up amount of your policy which also leads to more benefits on bonuses and the maturity amount. There are many riders available in the market and people buy them according to their needs and convenience however the most commonly bought riders are as follows:
1. Premium Waiver Rider
2. Return Of Premium Rider
3. Accidental Death Rider
4. Family Income Benefit Rider
5. Child Term Rider
6. Guaranteed Insurability Rider
7. Accelerated Death Benefit Rider
8. Long Term Care Rider
How Are Life Insurance Riders Helpful?
Riders are both like the need and the extra cherry on the cake. They not only provide you with enhanced coverage but also with better protection at affordable prices and who won’t like this? Riders come with add on benefits and prove to be helpful in the long term in the following ways-
1. No need for having multiple policies with different coverages when you have an all in one policy with riders.
2. Riders reduce the hassles and management pressure of handling different stand alone plans.
3. They enhance the coverage of your plan according to your personal needs and help you plan your finances strategically.
4. They provide you with instant financial help in times of emergency with riders such as accidental death benefit, accidental disability benefit etc.
5. Riders are known to provide the best death benefits, some riders even pay double the insured amount which becomes a great support to the family in need.
6. You can plan the specifications of your policy rider (such as payment duration, duration of rider etc.) according to your budget.
7. Riders give you tax exemptions under sections 80C and 80D of the Income Tax Act.
8. Riders add to your principal amount and increase your maturity benefits.
9. They’re much more affordable and cost effective than separate plans hence you can invest your money in different ventures.
10. Riders can be canceled anytime during the policy’s tenure without a long procedure.
11. Riders such as premium waiver and return of waiver are great facilities and can be easily availed in times of need when the insured person is unable to continue with the plan.
Riders are additional plans that aid your insurance plan and increase the coverage and protection for the future of your loved ones. They're very beneficial in the long term and it is advisable to consider investing in cost-effective riders before venturing into a whole new policy.
Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.