What Are Riders?

What are Life Insurance Riders?

Riders are the optional additional features that you can add in your life insurance policy in exchange for an extra amount of premium. You can add these riders to enhance the base coverage of your life insurance policy. 

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Types of Life Insurance Riders

There are different types of riders available in the life insurance market. There are 8 most used life insurance rider, that offer different benefit and they are as discussed below:

1. Accidental Death Benefit Rider

Accidental Death Benefit rider provides sum assured along with rider benefit to the nominee/beneficiary in case of accidental demise of the policyholder/insured. In many cases, accidents might not lead to the on the spot death of a policyholder/insured, the insurance companies provide a duration after the accident occurs to provide the given cover. For example if the policyholder/insured passes away within 120-180 days when the accident occurs the nominee/beneficiary will be provided with a sum assured amount. As you cannot predict any mishappening taking place this rider can be purchased by everyone.

2. Accidental Total and Permanent Disability Rider

Under Accidental Total and Permanent Disability rider the insurance company provides the rider benefit to the policyholder/insured if he/she suffers total permanent disability caused by an accident, forcing the life insured to quit working. Mostly this rider comes along with the Accidental Death Benefit rider.

3. Critical Illness Rider

Critical Illness rider is mostly opted by potential buyers because it covers major critical illnesses. Though the critical illness listed in every insurance company’s terms and conditions are different but it is advised to check the list to make sure if you have been diagnosed with any critical illness are mentioned in the list. Insurance company provides critical illness rider benefit to the policyholder/insured on the diagnosis of any listed critical illnesses. People who consume tobacco and alcohol on a regular must opt for this rider. 

4. Waiver of Premium Rider

Waiver of Premium rider waives off all the future premiums of the life insurance policy if the policyholder/insured suffers disability, disabling the policyholder/insured to pay future premiums for their life insurance policy. This lets the policyholder/insured enjoy the policy benefit even after receiving the waiver of premium rider benefit. Waiver of premium rider mostly comes with Accidental Total and Permanent Disability rider or with Critical Illness rider.

5. Accelerated Death Benefit Rider

In Accelerated Death Benefit rider, if the policyholder/insured is diagnosed with a terminal illness, the insurance company will provide a part of the sum assured amount in advance. The policyholder/insured can use the amount for his/her treatment. If the policyholder/rider passes away due to terminal illness such as Leukemia, HIV AIDS, Cancer etc. then the remaining sum assured will be provided to the family of the policyholder/insured.

6. Term Rider

In Term rider if the policyholder/insured passes away in any case, the nominee will receive a monthly income or a lump sum. The amount of rider benefit can be equivalent to the base plan coverage of the life insurance or it can be a pre-decided amount already mentioned in the policy.

7. Hospital Cash Rider

Under this rider, if the policyholder/insured has to be admitted to the hospital for treatment then a fixed amount of rider benefit will be provided to the policyholder/insured depending on the per day expense of the hospitalisation. 

8. Surgical Care Rider

In Surgical Care rider if the policyholder/insured has to undergo an unavoidable medical surgery in India, he/she will receive a lump sum as rider benefit by the insurance company. The rider benefit differs in every type of surgery.

Tax Benefits for Life Insurance Riders

The policyholder/insured can avail tax benefit for the life insurance rider he/she opted for. Premiums paid for the Critical Illness Rider are tax free under the Section 80D of Income Tax Act, 1961. Premiums paid for the Accidental Death Benefit Rider or Accidental Total and Permanent Disability Rider are tax free under the Section 80C of Income Tax Act, 1961.

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Conclusion

Riders can help avoid desperate situations, overall in exchange of just a little more investment in the life insurance policy the riders provide protection from scenarios such as hospital expenses, accidental death of the policyholder, accidental disability, critical illness cover etc. Life insurance riders enhance the power and coverage of your basic life insurance policy. You can get protection from unforeseen events by opting for riders.