Rider in Life Insurance
Whenever you purchase any insurance policy, you must have noticed one or more rider options provided.
So, a common man always has this question in mind – what is a rider, what are its benefits and should we take a riders with the normal insurance policy or not. So, this article will answer all your questions related to riders.
What is Rider ?
Riders provides additional coverage and added protection against risks. Insurance riders are effective add-ons you can choose in addition to your life insurance policy at economical rates.
Why should I buy rider?
Whenever a company launches any insurance policy, it has certain objectives associated with it. Say for example, you buy a 20 yr insurance policy of 1 Crore. For which you have to pay Rs 10,000 as yearly premium. So, what happens, if the policy holder dies within these 20 yrs then the family gets a cover of Rs 1 Cr. But what if some other problem arises. Like critical illness, accident, permanent disability etc, then the family will face financial problems.
So, if such a situation arises, then this insurance policy will not be helpful to you.
Now, you may think that you have to buy a term insurance policy, then an additional policy covering accident & critical illness. So, if you buy different policies for different needs then you will end up buying too many insurance policies & paying too much premium.
To deal with this situation, insurance companies have come up with the concept of a riders.
Under this rider concept, you can take additional benefits with your existing policy. Like accidental or critical illness or other benefits as per the riders available with the policy.
You can select more than one riders as per your preference.
So, just by paying a little extra premium you can avail the benefit of the rider & you do not need to buy an additional policy.
Types of Riders:
- 1. Accelerated death benefit rider: This is an added feature that comes as an extra rider and allows a policyholder or his nominee to have additional benefits. Apart from the base plan benefits, it allows extra coverage in the event of the policyholder’s death due to any redefined condition.
- 2. Accidental Death benefit: This rider comes with a clause of a lump-sum payment of the sum assured to the nominee in case of policyholder’s death due to an accident/mishap.
- 3. Accidental disability rider:In the event of any kind of disability, this rider provides financial protection. The Accidental disability rider must be chosen as per the actual requirement.
- 4. Critical illness rider: This is an additional rider that provides additional coverage in lieu of the extra premium terms and accompanying payment choices. This term rider offers comprehensive financial coverage against the possibility of any critical illness. This Rider Provides coverage against critical illnesses that are defined and listed in the policy documents of respective insurers.
- 5. Income rider: This is the rider that allows the policyholder’s nominee to get a specific amount of sum as a fixed income in the event of the policyholder’s death during the duration of the plan.
- 6. Waiver of premium: This is the most sought-after riders, often added to other policies, especially a child plan. In this rider, there will be no payable premiums if the policyholder dies and her/his nominee will be eligible for the base plan benefits.
How can we buy rider?
The riders are sold at the time you buy an insurance policy. For example, when you buy a policy from an insurer, you can also choose the riders from the list. Keep in mind that these riders should be bought at the time of purchasing the base insurance plan. The riders cannot be added after the base policy is bought. It is worth taking time to evaluate whether or not investing in an additional rider is beneficial for you. While some insurance companies have in-built riders in the basic life insurance policies, others have flexible-plans, which can be customized according to your demands.
- They offer extra coverage which can be helpful in times of financial crises
- Buying a riders is much more economical than buying a separate insurance policy
- It makes the insurance policy more economical
- It allows you to customize your insurance policy
In conclusion, it is always best to know what your insurer has to offer so that you can get the most out of your life insurance policy. It is recommended that you analyze and research possible riders that can meet your future needs.
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