Why Are Life Insurance Riders Important?
Published On Mar 09, 2021 12:00 AM By InsuranceDekho
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Riders can be described as coverage enhancements that one can choose to carry over and above their standard life insurance package, to expand the scope of the coverage. At the moment of buying a policy, or even at the time of renewal, add-on riders can be taken. The rates charged to these riders are above the base plan premium.
Also Read:- What are Riders in Life Insurance? What are their benefits?
Importance of Having Life Insurance Riders
Riders are extensions to insurance coverage that can be opted to taken for expanding the scope of the coverage of the base life insurance policy. At the time of buying a policy, or even at the time of renewal, add-on or riders can be taken. For these riders, the premiums paid are above the base plan premium. Given below are some of the reasons for buying life insurance riders.
1. Allow for Policy Customisation
Having an add-on rider for your life insurance policy that offers a basic cover against the risk/uncertainty/possibility of death helps you to customise the plan. You can get increased protection against a potential risk with the right rider, which may not be included in the basic policy.
2. Make Insurance More Economical
Getting an add-on or rider eliminates the requirement to buy an additional life insurance policy. The resulting benefit the policyholder gets is that the policyholder does not have to pay a higher additional premium for a different life insurance plan. In contrast to the premiums payable for a fully operational life insurance plan, the premium paid for an add-on or rider is considerably lower. So, making an add-on actually saves you a large amount of money, which is definitely is a positive feature
3. Eliminates the Need for an Additional Policy
Life insurance plans offer coverage for many risks such as permanent disability, partial/total/temporary disability, income loss, sudden death, serious illness, and many more. Nevertheless, you will not find a case where a single policy gives protection from multiple risks. This is where the add-ons are essential. To get extra benefits, you can buy riders or add-ons to your base life insurance plan, without requiring to buy another life insurance policy to get the same coverage.
4. Flexibility and Tax Benefits
Life insurance riders are flexible and whether it is a ULIP, a whole life insurance plan, or an endowment plan, it can be added to any life insurance policy at the same time customising it to the policyholder's needs. Under Section 80D of the Income Tax Act 1961, the premiums paid on riders or add-ons are also eligible for deduction under the tax benefit provisions.
You May Also Like To Read:- What is Accidental Death Insurance Rider?
Reasons to Add Riders to Your Life Insurance Policy
Insurance riders are add-ons, which implies additional benefits that an insured can select when buying life insurance. These add-ons broaden the ambit of the insurance plan by adding numerous other occurrences that may have a detrimental effect on the policyholder’s life, such as the event of an accident or becoming critically ill because of a chronic illness such as cancer or heart attack. When the reach of the policy is broadened by having an insurance rider, the advantages also widen.