What Are The Benefits Of Purchasing Add-Ons With Your Term Plan?
Updated On Aug 30, 2021
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Insurance has become a requirement for the family's major wage earner. The advantages of purchasing a life insurance policy extend beyond providing financial security to the policyholder's family in difficult times. Insurance plans serve as a financial safety net, as well as a great saving and investing instrument, as well as a source of mental peace and assistance with tax planning. Term plans are the most well-known, straightforward, and cost-effective of the different life insurance policies currently available.
What are Term Insurance Plans?
Term insurance is a sort of life insurance policy that covers you for a set amount of time, or for a set number of years. The death benefit is given to the nominee if the policyholder dies within the stated term or during the active period of your policy. However, if you live longer than the term of your term insurance policy, you will lose the money you paid as a premium. In other circumstances, term plans alone may not be sufficient. For example, if a policyholder is seriously injured in an accident or is diagnosed with a life-threatening condition, a term plan may not be able to cover the significant costs of long-term care. Individuals can buy additional rider benefits to prepare for such events.
What are Riders?
A rider is an additional endorsement to an insurance policy that provides additional coverage to the policyholder. Aside from the main offering of a death benefit, riders augment an insurance policy by providing several additional benefits. Riders can be added to any type of insurance plan, including term, endowment, unit-linked insurance plans (ULIPs), and money back plans. Riders can be chosen by the policyholder depending on individual and family needs, as they can improve life insurance and protect the family's financial well-being more thoroughly.
Must read: Meaning of Term Insurance Rider
Riders and Their Benefits
The following are some of the more important riders.
Accidental Death Rider
If the life assured dies in an accident, an accidental death benefit rider pays an additional sum assured to the policyholder's dependents. The basic sum assured is still paid, as well as an additional payment above and beyond the basic sum assured. This additional amount is computed as a percentage of the basic sum assured and varies by company. In rare circumstances, it can also be capped. It's vital to note that this rider's benefits are only available if the death was caused by an accident. People who work in hazardous environments or who routinely expose themselves to physical risk may benefit from this insurance coverage.
Critical Illness Rider
Critical illness riders help policyholders cope with the financial strain of costly medical treatments by providing a lump sum payment if they are diagnosed with a severe disease. Most serious illnesses are covered by critical illness insurance. The insurance may continue or terminate depending on the policy terms and circumstances after the critical illness has been discovered and payment under the rider has been made. In some circumstances, the amount paid out to the policyholder reduces the policy coverage.
Accidental Disability Benefit
If the life assured is involved in an accident that results in a partial or permanent disability, this rider compensates the disabled life assured on a regular basis for the next five to ten years after the accident. This can be extremely beneficial to the policyholder in terms of ensuring a steady stream of income. It's vital to note that this rider's benefits are only available if the impairment was caused by an accident.
Accelerated Death Rider
If the policyholder has a terminal disease, the accelerated death benefit rider might be quite beneficial to the family. This rider pays a portion of the money assured in advance, which might aid in the management of medical expenses for the patient. The amount of the money promised payable in advance is specified in this rider. The expedited death benefit rider is a very useful rider that is quite inexpensive.
Waiver of Premium
If the policyholder is unable to pay the premiums due to a disability or disease that causes them to lose their job, the waiver of premium rider may be useful. It protects the insurance coverage by waiving future premiums and guaranteeing that the policy stays active. This rider is usually included as part of a standard term insurance policy. This rider is equivalent to having all premium payments protected until the policy's expiration date.
The basic sum assured determines the riders' premium. Naturally, some riders are less expensive than others. While buying term life insurance, you should look for riders that will make your coverage more comprehensive while saving you money.
Also read: Term Insurance Riders Working In Detail
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.