03 May, 2022 | Term Life Insurance

How To Select The Right Riders In Term Insurance?

Team Beshak
By Team Beshak
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Introduction

Today, most term insurance plans offer multiple benefits and features to provide you and your family with a simple and easy experience. You are offered several options for customising your policy based on your family’s requirements with features like claim payout option, limited pay option, increasing cover, and so on. Apart from these customization options, many insurers also offer the option of adding more coverage to your term plan via riders.

In this article, let us discuss and learn about term insurance riders and find out which rider can be helpful for you and your family.

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What are Riders and how are they helpful?

Riders provide incremental coverage or enhance the total scope of cover in your term insurance by way of attachment to the base plan through a simple consent. 

By paying a little extra, you can enjoy these ready-made extensions to your term insurance policy. Term insurance riders are one of the most convenient customisations. You do not need to submit any additional documentation or undergo medical tests for purchasing a rider once you have already submitted the required documents for your base plan. It also saves you from managing several insurance policies for every possible situation. 

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Types of Riders

There are several types of riders in insurance. Here’s a list of some of the most popular riders available in the market. 

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1️⃣ Critical Illness Rider

Under this rider, your family receives a certain sum assured of money if you are diagnosed with a serious illness or disease mentioned in your policy. However, when you opt for this rider, you need to check whether the plan offers you a Comprehensive cover or an Accelerated cover. 

In a comprehensive cover, you or your family will receive an additional sum assured of money apart from the term insurance cover. On the other hand, in an accelerated cover, the sum assured is provided to you or your family from your total base cover amount. 

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1️⃣ Critical Illness Rider

Who Should Buy This Rider? 

It doesn’t matter how healthy a lifestyle you practice, as sometimes you do not have control over certain situations, especially when we talk about a critical illness or disease. If you are one of the main earning members of your family, choosing this term insurance rider can save your family from the financial burden of additional costs that come along with an illness. 

Even though you have a health insurance policy to cover hospitalisation and related medical bills, the policy will not help you cover additional expenses like buying a wheelchair, making modifications around the house, hiring a full-time nurse, etc. This is where a critical illness rider comes into the picture. It provides you and your family with a fixed sum assured and helps you pay for all the required expenses. 

Who Should Skip This Rider?

As life is quite unpredictable, we suggest you buy the critical illness cover either in the form of a standalone policy or as a rider. You should consider choosing this as a rider if you want to buy a critical illness cover at a relatively lower cost. If not, you can skip this rider and look into a critical illness insurance policy

In addition, most of the time, a critical illness rider does not provide you cover during the early stages of the illness, although the illness or disease is mentioned in the policy. For example, if you are diagnosed with 1st stage cancer, the rider does not provide you with a cover until further stages.

What is the Alternative Option?

The best alternative for a critical illness rider is to buy a separate critical illness insurance cover. Compared to a critical illness rider, the premiums for a standalone cover are slightly expensive & also increase with age. However, in a standalone cover, there is no limit on the cover amount, and most plans also offer cover for the early stages of an illness. 

To learn more about Critical Illness Insurance, refer to our deep-dive on Critical Illness Insurance

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2️⃣ Accidental Death Benefit Rider

This rider will offer an additional sum of money if one passes away in an accident. 
For instance, say Ananya purchases an INR 1 Crore term insurance with an accidental death benefit rider worth another INR 1 Crore. During the policy duration, she meets with a road accident and dies on the spot. In such a scenario, her nominee will receive a total claim of INR 2 Crores. (Term insurance claim of INR 1 Crore + Accidental rider benefit of INR 1 Crore).

Who Should Buy This Rider?

If you aren’t able to choose a certain base cover amount for your family due to eligibility issues, then we suggest you choose the Accidental Death Benefit Rider with your term insurance base plan. With the help of the accidental death benefit rider, you can partially fulfill the need for a higher Life cover & hope to provide your family with a sufficient corpus in case you were to die in an accident.  

Who Can Skip This Rider? 

If you want a more comprehensive personal accident insurance cover that provides for accidental death, disability, accidental medical expenses as well as ancillary coverages like funeral expenses, children's education, or transportation of mortal remains, you should skip this rider and go for a standalone policy.

What is the Alternative? 

The alternative option for an accidental death benefit rider would be buying a standalone accidental insurance cover that offers a payout in any kind of accidental death. 

Another advantage of buying a standalone personal accident cover is that you can run it independently as well as choose its duration, unlike the rider whose duration is linked to the term plan cover.

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2️⃣ Accidental Disability Rider

Under the accidental disability rider, you and your family will receive an additional amount of sum assured if you develop a disability due to an accident. However, it is important to note that this rider only provides cover in limited cases, like a permanent or total disability. 

Who Should Buy This Rider?

Any kind of disability can cause a huge financial strain on your family, especially if the disability renders you unable to work. From paying the hospital bills, visiting the doctor for your physiotherapy or any other consultation, to buying a wheelchair, etc., the entire responsibility of paying these bills comes to your family. 

This is a very beneficial rider for someone who works a high-risk job or is mostly working on-field. 

Who Should Skip This Rider? 

If you have a comprehensive/standalone personal accident cover that insures you against accidental death & disability, you can skip the accidental disability rider with your term plan. 

What is the Alternative Option? 

The best alternative for this rider would be buying personal accident insurance. The policy can provide various benefits and features at the same cost as the accidental disability rider. Here, there are no limitations on the kind of disabilities the policy covers. Also, you and your family will have a sufficient amount of money for the long run. 

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4️⃣ Waiver of Premium Rider

The waiver of premium rider is among the most important ones. It ensures that you can keep your term cover active even if you are not able to pay the premium due to a covered event like a listed critical illness or accidental disability. We recommend everyone to buy this rider with their term insurance plan. There is no alternative for this rider. 

To conclude, riders can be helpful for you and your family during a crisis situation. However, before buying a rider, you must check whether you really need it or not and if it fits your financial needs.

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Confused about which customisation options to pick and which to skip? 

Check out Beshak TruMatch the first-ever term insurance recommendation engine that recommends the right customizations you must pick so that your term plan is perfectly tailored to your family’s needs.

Key takeaways
  1. You can buy term insurance with riders that provide wider coverage to your family by way of appending certain coverages like critical illness, accidental death benefit, waiver of premium, etc. 
  2. The 4 most popular Riders in the market are Critical Illness Rider, Accidental Death Benefit Rider, Accidental Disability Rider, and Waiver of Premium Rider.
  3. There are two types of Critical Illness Riders - Comprehensive and Accelerated. 
  4. Only choose a Critical Illness Rider if it is an emergency. Otherwise, we suggest you buy a separate critical illness cover.
  5. In terms of value, it is better to buy a standalone accidental policy than an accidental death benefit rider.
  6. Do not skip the Waiver of Premium Rider. It is one of the most beneficial and low-cost riders.
Team Beshak
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Team Beshak, We breathe insurance :)

We are a group of young members of the Beshak community. We come together to brainstorm, write relevant and useful content for people (just like us) who want to figure insurance on their own. If you too want to share inputs/write for us - send us a "hey" to info@beshak.org

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