Understanding riders in term insurance: which ones to choose?

The coverage is offered for a pre-defined period in exchange for a pre-determined premium already paid. The beneficiaries receive the death benefit if the policyholder passes away during the plan tenure. However, if the policyholder and the insured individual are different and the insured person passes away, the insurer provides no benefit.  

This is a pure life coverage plan, i.e., it does not offer any investment or savings benefit. If the insured outlives the plan tenure, then also he/she will receive any benefit from this.  

However, you can enhance the protection span by adding befitting riders to the base plan.  

What are term insurance riders? 

This is a typical optional benefit that the insured individual can avail of to make the base plan more comprehensive. A term insurance rider is an additional add-on which optimises the overall benefits of the base plan. This gets activated only after a specific event has occurred.  

The term insurance rider benefits are absolutely optional. It aids in customising the principal plan up to a certain extent.  

List of common riders in term insurance 

The overall coverage span of term life can be extended according to your convenience by adding add-ons to the basic plan. Some of the popular term insurance riders include the following: 

1. Accidental Death Rider:  

Observing the increasing number of accidents, it has become almost imperative to ensure protection against such unforeseen circumstances. A standard term plan offers death benefits, but in an accidental death scenario, this rider enhances the insurance coverage. So, by choosing this rider, the family members of the concerned policyholder receive accidental death benefits apart from the sum assured protection of the base plan. 

2. Critical Illness Rider:  

This rider has been specifically crafted to allow coverage on detection of any listed critical ailment like cancer, cardiovascular diseases, cardiac arrest, coma, etc. Treating such issues can obliterate your savings fast. So, attaching this rider to your base plan can save you from such rainy days. You will receive a lump sum benefit from your insurer on diagnosis of any of the listed critical ailments as followed by your insurer. Moreover, it also acts as an income substitute as you become unfit to work due to your ailment. 

3. Permanent and partial disability rider:  

This rider has been designed to cover the loss of temporary or permanent disability caused by an accident. This proves to be essentially helpful during such tough times as it copes with both the high treatment costs and income loss. Depending on the level of disability, either the sum assured or a percentage of it is paid to the insured. However, several insurers often waive future premium dues under such circumstances without plan discontinuation.  

4. Premium waiver rider:  

With this rider, your future premium dues get waived, keeping your plan active, especially during accidents or disabilities leading to income loss. Depending on the terms of your chosen plan, the death benefit is also offered. This rider helps you to retain your peace of mind despite challenging unprecedented circumstances.  

5. Accelerated death benefit rider:  

This has been crafted to cover losses caused by terminal ailments like leukaemia, cancer, etc. Under this rider, the insurer usually offers 50% of the amount of the sum assured on detection of any listed terminal ailment while the remaining 50% is paid as a death benefit to the nominee after the demise of the insured.  

6. Income benefit rider:  

If you go by the name, you can understand that the term insurance rider acts as a way of income substitution during any unfortunate event. This proves to be a saviour, especially if the insured person happens to be the sole breadwinner in the family. It happens to efficiently manage the financial distress caused due to such unfortunate events.