Why Should You Buy Life Insurance Riders?
Published On Jun 16, 2021
Table of Contents
- Types of Life Insurance Riders
- Why Should You Buy Life Insurance Riders?
- When Can You Buy and Cancel Life Insurance Riders?
Life Insurance Riders are additional benefits which can be added to a basic life insurance policy. These riders allow a life assured to customize a policy and provide additional protection to their family and loved ones in case of any unfortunate event.
It can also be defined as a modification to an insurance policy that already exists, providing it protection against any risk for one's own self and their family. There are various kinds of life insurance riders. In this article, we will discuss them and their benefits in detail.
Types of Life Insurance Riders
Here is a list of some of the most popular life insurance riders along with their details.
1. Accidental Death Rider
Accidental death benefit rider provides an additional sum assured to the family of the nominee if the life assured dies due to an accident. Also, if there is an event of death which occurs due to accidental bodily injury, the assured's family gets the required financial assistance provided the death has occured within 180 days of the accidental injury.
2. Critical Illness Rider
When you add a critical illness rider with your basic life insurance then the policy pays a lump sum amount if you are diagnosed with any of the diseases covered under the plan. Some of the critical illnesses covered in this rider are cancer, renal failure, heart attack, major organ transplant, paralysis, stroke etc. In case of diagnosis of the covered condition, the insurance plan may continue or end depending on the terms & conditions.
3. Accelerated Death Benefit Rider
In such cases where the life assured is diagnosed with a terminal illness such as Cancer, Paralysis, major organ transplant, etc. then this accelerated death benefit rider pays a part of the sum assured in advance which can be used for the treatment. This one-time lump sum payout on diagnosis can be fixed at the time of purchase. The remaining amount of money is paid to the family after the death of the nominee.
4. Premium Waiver Benefit Rider
In case where the policyholder becomes disabled for a sustained period or dies before the completion of the policy term, then all the future premium payments due under the policy after the date of the incident will be waived off. However, the benefits under the policy will be available to the life assured.
Why Should You Buy Life Insurance Riders?
Life Insurance Riders are an ideal way through which you can increase your insurance coverage without a completely new policy. There are various benefits of riders such as:
1. Enhanced Coverage
The most common reason why one should have a life insurance rider is that it provides enhanced coverage. The base protection which is offered by a life insurance policy can be enhanced significantly with the help of these rider policies which can be extremely helpful in times of financial crisis.
Buying a rider is more affordable instead of buying a separate insurance policy. And you also get to choose what riders you want which makes it more cost-effective.
3. Tax Benefits
The proceeds received under a rider plan are exempted from tax under Section 10(10D) of the Income Tax Act, 1961.
When Can You Buy and Cancel Life Insurance Riders?
1. Buying riders
Most of the life insurance companies offer buying of riders only at the time of policy purchase or anniversary. But this system is different from insurer to insurer. Hence, it is suggested to plan strategically before planning any life insurance plan and riders.
2. Cancelling riders
There is no worry about cancelling the riders. The life assured can cancel these optional featured riders at any point of time during policy tenure.
Life insurance riders are the easiest way to modify your insurance policy as per your individual needs. However, before doing so, it is good to collect all relevant knowledge about a rider plan. If required, have a discussion with an insurance advisor to evaluate the benefits of riders and then buy the best one which is suited to you and your family.