A Guide to Riders: What is a Rider and How is it Beneficial for You?

People require a source of income for various reasons, the most important of which is financial security and independence. However, earnings are susceptible to setbacks, which can occur due to various reasons outside one's control. People accumulate wealth and invest some of it in life insurance to protect themselves against such hazards.

Life insurance policies serve as a safety net in the event of a significant financial disaster, such as premature death. Unfortunately, several factors might disrupt one's financial well-being, which is why most life insurance plans, including term insurance plans, provide riders. Read on to know more about insurance riders

What is a Rider in Insurance?

Rider may be defined as an extra layer of protection that you may add to your existing policy. Simply defined, an insurance policy rider is a provision or addition to an existing insurance policy that provides additional coverage, or risk protection, to the policy. They are cost-effective add-ons that you may apply to your existing insurance policy to enhance your life insurance policy. In other words, riders broaden and strengthen your insurance coverage, covering more than simply death.

Benefits Of Adding Insurance Riders

 

Improved Security

The most significant reason for adding riders to your life insurance policy is that you want to protect your family from several risks. Without a doubt, death is the ultimate source of a family's financial problems. Accidental impairments and life-threatening illnesses with costly treatments, however, can be just as distressing, if not more so. Adding riders to your life insurance policy gives it more weight and better protects your family.

Enhanced Coverage

Adding riders to your base life insurance policy also increases your overall protection pool. For example, if your base life insurance policy has a total assured benefit of Rs. 1 crore, a rider can add Rs. 25 lakhs to it. It is a significant advantage to opt for riders, since in many situations- such as accidental fatalities and prolonged hospitalization- high medical costs may be incurred prior to unfortunate demise. As a result, your family will need far more funds than the death rider to cover all of such expenses.

Extra Benefits

Some companies also provide a child support rider with an extra sum assured with their term insurance plan. It means that your insurance will cover your child's education independently while also providing a baseline sum to the family.

Waiver Premium

If you get a severe disease or become disabled due to an accident, the life insurance riders that cover these risks will give you financial help. However, your income may decrease as a result, and you will be reliant on your insurance money for treatment and family expenses. You can choose the premium waiver rider to keep your life insurance from expiring. As a result, if you file a claim for critical sickness or incapacity, your life insurance will continue without you having to pay any more premiums.

Criteria for Term Riders Eligibility

Following are certain criteria related to riders :

• As mandated by IRDAI rules, the total rider premium under all riders put together cannot exceed 30 percent of the base plan premium. Also, in case of term plans, premium under health riders cannot exceed 100 percent of the base plan premium.


• The term of the rider cannot exceed the term of the base policy. Even the sum assured of the rider cannot exceed the sum assured of the primary policy.


• Conditions relating to the term of the rider, age at entry and sum assured of each rider will also depend on the conditions of the base policy it is attached to.


• Rider benefits will stop on the maturity of the policy.

 

NOTE : Riders are optional and available at an additional cost.