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What Is The Difference Between A Term Insurance Rider And A Term Insurance Policy?

Updated On Feb 23, 2022

Riders can help you get much-needed benefits in addition to those offered by an insurance policy if you choose them correctly. Riders are a sort of supplemental insurance that adds to the advantages of your primary policy. A small fee will be charged to augment the insurance element of the protection against specific conditions/unexpected situations. Riders are frequently customised to meet specific needs, such as additional life insurance coverage or payouts in the event of a crash, incapacity, hospitalisation, severe ailment, and perhaps other life situations.

A term life insurance policy provides coverage for a specific number of years and typically has a set premium. Term insurance is said to be the most basic type of life insurance policy, providing complete coverage to the policyholder's beneficiaries in the event of his or her death. Riders can be added to a term insurance plan to provide additional coverage, such as insurance towards accidental death or catastrophic diseases. The cost of term insurance is one of its key advantages. Term insurance products have exceptionally low premiums while yet offering a substantial sum assured. To get to know more about the difference between a term insurance rider and a term insurance policy, read on.

About Term Insurance Rider

Term insurance riders are additions or attachments to a term insurance policy that provide additional coverage to the policyholder and so increase the policy's usability. Aside from the death payment provided by the term insurance policy, riders give a number of extra benefits.
Whereas most term insurance plans have riders, the cost and terms of such riders vary depending on the term policy, premiums, and business. Furthermore, certain riders are included as part of a package deal with term insurance plans, while others must be acquired separately by users by paying the extra premiums. Riders' premiums are often lower than those for term insurance plans, and their sum guaranteed is also lower than that of the insurance cover.

About Term Insurance Policy

A term insurance plan is a type of life insurance that provides financial protection to the policyholder for a certain period of time. The death benefit is paid to the beneficiary if the insured person dies during the term of the policy and while the policy is valid. Furthermore, because term insurance policies have no cash value, they are far less costly in the beginning compared to permanent life insurance policies. To put it another way, the only value of term insurance plans (pure life insurance) is the instant death benefit received by that of the beneficiaries, whereas other life insurance plans, often known as endowment plans, have a built-in savings element.
As a result, term insurance policies are more simple and less expensive than other types of life insurance. Especially opposed to endowment plans, this allows users to pick a bigger life protection at lower rates. Furthermore, although many term policies have fixed premiums for the life of the policy, others have benefits that increase or decrease well over the span of the policy's term, as well as the opportunity to switch the term insurance to something like a permanent insurance policy.

Following are the types of term insurance policies -

  • Convertible term - Convertible term plans help policyholders to change existing term insurance policy, that may still be valid for a few years, into something like a permanent insurance policy.
    Increasing term - After a certain amount of time, only a few plans enable policyholders to enhance the death benefit. While the rates may rise as a consequence, policyholders will initially pay cheaper premiums.
  • Decreasing or Mortgage term - In a declining term (also known as a mortgage term) insurance, the coverage lowers at a specified rate over the term. The rates are normally consistent across the term (and are cheaper than term policy premiums), with the coverage decrease occurring monthly or yearly.


These riders are now available as a specific product or alternative on some products. It works in the same way, and it is well worth paying a tiny additional premium for such advantages, which may be quite beneficial to the covered or nominee in the event of an unexpected and unforeseeable occurrence.

Also Read: How Do Riders Help In Customising Life Insurance Policies?

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.

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