Why Should You Opt for Riders in Life Insurance Policy?

Everyone is aware of life insurance policy, and almost everyone has some or the other form of cover. But do we know about the rider options?

Life Insurance Policy – The Basics

Life insurance policy is insurance for your family in case something uneventful happens to you. The insurance policy was started on the pretext that anything can happen to anyone, and families shouldn’t have to struggle in case anything uneventful happens. There are other benefits that insurance leaves us with, including tax concessions and benefits under section 80C.

What Is A Rider?

A rider is an add-on. A policy with rider option provides more benefits than the original purpose of the insurance. Life insurance policy has evolved with time. Some of the add-ons can immensely benefit those who want protection that is more complete than a basic protection cover.

Terms and Conditions For Policy With Rider Option

The IDRAI rules form the backbone of all the policy structures. Some of the rules, terms, and conditions are:

• Term of the rider should be less than or equal to the insurance cover term.
• The sum insured should be less than or equal to the original insurance cover sum.
• Total rider premium can’t exceed 30% of the base plan and more than 100% in case of health benefit riders.
• Rider is dependent on base policy. The conditions will depend directly on the base policy, as determined by theterm, age at entry, and sum assured.
• Rider benefits stop when
  • Either the age of 65 is reached
  • Or policy has matured, whichever is earlier.

The Various Types OfRiders You Can Opt For:

• Abandonment of Premium Rider
• Critical Illness Rider Benefit
• Accidental Death Rider
• Accidental Partial & Permanent Disability Rider
• Income Benefit Rider

Accidental Partial & Permanent Disability Rider

Life insurance policy doesn’t hold much worth in case an accident leaves the injured permanently disabled or partially disabled. The injured is unable to lead his or her life normally. In such cases, the term insurance with permanent disability cover provides a lump sum amount, or waives the premium and provides the rider sum insured to the insured.

This rider is extremely important because of the number of accidents and disabilities our young population is getting involved into. If the statistics are to be believed, almost half of the road accident victims were below the age of 35. This rider can help them move on with the life in case anything uneventful happens,and they suffer from partial or complete disability due to the accident.

Waiver of RiderPremium

Waiver of riderpremium on your life insurance policy looks after the situations where the insured is unable to pay annual premium in case of economic or health issues. Income losses and critical illness qualify as the major reasons for the abandonment of rider premium. The premium being waived won’t mean the cover is stopped. In such cases, the cover will continue to be there even in case of premium being waived.

Critical Illness Rider Benefit

This add-on on the life insurance policy protects in case of critical illnesses like cancer, tumor, kidney disorders, coma, heart attacks, etc. The sum assured in case of critical illness helps in the expenditure and works as an income replacement. Critical illnesses render life to a halt, and at such times, having the financial side secured is one of the only positives.

The important thing to notice is the list of critical illnesses. Each insurance cover provider has different lists of critical illnesses covered under them. It is important to check the list in their policy documents or over their website. Also, check the terms and conditions carefully. After providing the sum assured, the base policy cover ends in some of the policies. Going through the LIC rider brochure will make you aware of all the important details.

Income Benefit Rider

One-time assured money is provided by the insurance company in case the insured dies. However, that still isn’t adequate at times, especially if there’s nobody who could start over with the regular earning. In such cases, having an income benefit rider helps immensely. This rider provides with regular monthly income in case of death of the person insured.

Conclusion

A rider on your life insurance policy works on the same basis as the base policy. It is an add-on that takes your insurance to the next level by covering for things that aren’t otherwise possible to be done. It can help your family,or you get by in case something unprecedented happens. Insurance is supposed to protect you and your family from the worst possible circumstances. A rider on the insurance just takes that insurance to the next level. Also, keep in mind the various terms and conditions as laid out by the LIC rider brochure.