What Role Do Add-ons Play in Life Insurance?
Updated On Sep 08, 2021
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Add-ons or additional benefits in life insurance are policies that you can opt for along with your base life insurance policy to extend your coverage. Also referred to as riders, add-on covers are not mandatory, however, they are highly advised. One of the most valuable life insurance tools, riders can be opted for by paying an additional premium price. What’s best is that with an add-on or rider by their side one gets saved from buying a totally new policy to enhance their coverage.
Benefits of Riders
Riders or add-ons are highly beneficial for policyholders. Life insurance riders are highly recommended due to their superior advantages like:
- Extra Cover: A policyholder can easily enjoy comprehensive coverage by investing in an add-on cover or rider of their need.
- Cost-effective: Buying a rider or add-on cover is far more reasonable as compared to buying a new policy. Insurance companies offer a vast range of riders and a policyholder can choose one of the best riders that meet their specific needs without putting in the effort, time and money in a completely new plan.
- Flexible: Add-ons or riders come with utmost flexibility. In other words, you can easily add a rider to any of the base insurance policies that you have, be it a term, ULIP, endowment, or whole life plan. Moreover, you can customize the plan as per your needs.
- Tax Benefits: Riders are additions to the base life insurance policies. Therefore, payment paid towards riders or add-ons also enjoy tax benefits according to the prevailing tax rules.
Different Add-on Options Available with Life Insurance
The list includes:
- Accidental Death Rider: All life insurance plans provide cover for accidental death. But, when you buy an additional rider of accidental death benefit, you buy an accidental death rider, the insurance company pays your nominee with upto double the sum assured in case you die in an accident.
- Accidental Permanent & Partial Disability: This rider is highly recommended for those who travel a lot. Under this add-on benefit, temporarily or permanently disabled due to an accident is covered. Moreover, most future premiums related to the base insurance policy are waived off.
- Waiver of Premium: This rider helps in ensuring that your life insurance policy stays active even if you are not in the condition of paying your premium. How? It is by waiving off all future premiums, but allowing continuation of the policy benefits.
- Income Benefit Rider: This add-on or rider provides a regular source of income to the family in the event of unfortunate death of the policyholder or their disability.
- Critical Illness: As per the critical illness rider, the policyholder is covered for critical illnesses. While the critical illnesses covered may vary from insurer to insurer, some of the common illnesses covered are cancer, heart attack, brain tumour, and more.
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.