Beef up coverage of your term insurance via riders

Life insurance is a must-have financial tool for every individual with some sort of financial responsibility. This has become even more important with change in lifestyle and increasing number of accidents.

A term insurance is the most basic and straight forward form of life insurance. While term insurance offers high sum insured at a nominal cost, it also offers option of including additional riders to increase sum insured and number of eventualities covered.

There is a wide range of riders that are available in the market and one must analyse the options and choose the one that fulfills their requirement. The most important thing to remember is that the rider sum insured is over and above the basic sum insured of a term insurance plan.

“Riders provide additional cover that is over and above the cover of base term insurance plan at a reasonably low premium. If a policyholder has to take separate cover for each of these eventualities, then the premium would be higher than the rider premiums. Also he does not have to go through the hassle of maintaining multiple policies” said Yateesh Srivastava, chief marketing officer of Aegon Religare Life Insurance.

Critical illness rider: This kind of rider provides coverage against specific critical illnesses to policyholders. In the event of diagnosis of a critical illness, an insurance company pays the sum insured specified under the rider and the cover ceases to exist. Generally the diseases that are covered under this kind of rider are heart attack, cancer, stroke, kidney failure, major organ transplants, paralysis, heart valve surgery and blindness.

Accidental death benefit rider: Under this rider, the nominee of a policyholder receives the additional sum insured as per the rider terms along with the basic sum insured of a term insurance plan.

Accidental disability banefit rider: This rider pays lumpsum amount in case of any partial, total, permanent or temporary disability due to an accident to the policyholder. Depending on the extent of disability and coverage, an insurance company pays the claim.

Hospital cash benefit rider: This rider pays a certain lumpsum amount in case the policyholder is hospitalised. “Irrespective of the actual expenses made by the policyholder during their stay in hospital, rider would pay the amount on a daily basis,” said A S Narayanan, chief distribution officer at Bajaj Allianz Life Insurance.

This rider does not pay for the hospital bills and, therefore, should be considered as an addition to the normal health insurance policy and not as an alternative.

While some insurers allow policyholders to subscribe rider plans during the policy tenure, some insurers do not provide this facility. Therefore, it is important for policyholders to check with the insurer before buying the policy.

Moreover, as per the insurance regulator, rider premium should not be more than 30 per cent of the total premium of term insurance plan.

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