What Is Insurance riders? Types, Benefits (5 Big Benefits)

Insurance riders : You try your best to provide your loved ones with a wonderful life. You work hard to make sure that you are able to make their lives comfortable and provide them with all the luxuries.

However, life is uncertain and you never know when an unfortunate event may occur. To protect you and your family from any financial hardships during these unexpected circumstances, you should opt for insurance coverage. A life insurance plan provides policy benefits to your beneficiaries in case of any untoward incident due to an accident or other such incidents.

A basic insurance coverage ensures financial protection of your loved ones in your absence. However, you can extend the coverage by adding riders to insurance policies. Such riders can be availed of when you purchase an insurance policy. In most cases, these extra riders are available at a slightly higher premium.

The maximum coverage available under an insurance policy depends on the basic sum assured and the various riders included in your plan. However, it is important to remember that the total premium on different riders does not exceed 30% of the premium paid for your basic policy.

Financial security and freedom are important reasons why we need some income source. However, there can be shocks in income, which may be due to any parameter which is not under your control. To be protected from these types of risks, it is important to build wealth by investing some amount in life insurance plans.

Life insurance policies are financial backups for emergencies that pose major financial concerns like unexpected death. Losing the sole breadwinner can be financially devastating for the family but life insurance provides them the financial security to stay safe.

Unfortunately, there are a number of factors that can interfere with their financial comfort and that is why most insurance policies give you the option of insurance riders.

What is Insurance Riders Meaning

An insurance rider is an add-on or additional insurance coverage that a policyholder can add to his or her current base plan. For example, while buying a term life insurance plan, the term policy is your base plan.

Meaning of rider in insurance:

In simple words, an insurance plan rider is a modification or provision to an existing insurance plan that provides additional coverage, i.e. additional protection against risk.

Insurance riders are add-ons that you can choose from along with your existing insurance plan to extend life insurance coverage at lower premium rates. Moreover, riders make your insurance plan coverage wider and stronger.

What is a Rider in Insurance

A rider can be defined as an extra layer of protection that you can add on to your existing policy. Simply defined, an insurance policy rider is a provision or addition to an existing insurance policy that provides additional coverage, or risk protection to the policy.

They are cost-effective add-ons that you can apply to your existing insurance policy to enhance your life cover policy. In other words, riders broaden and strengthen your insurance coverage, covering more than just death.

Types of Insurance Riders

Accelerated Death Benefit Rider:

This is an additional feature that comes as an additional rider and allows the insured person or his nominee to avail additional benefits. In addition to the benefits of the base plan, it allows additional coverage at the time of death of the policyholder due to any pre-determined condition.

Accidental Death Benefit Rider:

All life insurance plans cover unexpected death benefit. However, when you buy an Accidental Death Benefit rider, the insurance company pays double the Sum Assured to the policyholder’s nominee if death occurs due to an accident.

Let’s understand it with the help of an example:

An individual who already has an existing accident insurance plan for Rs 20 lakh and has no liabilities may not need to include the Accidental Death Rider benefit with his term plan. But if he/she is not adequately covered under life insurance and is financially incapable of availing any other plan for accident cover, then he/she can opt for Accidental Death Benefit.

This can make it a cost-effective way of adding financial protection to its survivors in the unlikely event of accidental death.

Accidental Disability Rider:

In the unfortunate event of any kind of disability, this rider provides financial security. This rider should be selected as per the actual need and not by mistake.

Critical Illness Rider Benefit:

This rider benefit is paid when the policyholder is diagnosed with any critical illness mentioned in the policy document like stroke, cancer, kidney failure, heart attack, etc. In such cases, Critical Illness Sum Assured is payable.

The benefits and rider premium for this benefit cease to exist subsequently. It serves as an income replacement plan as the money received under this rider can be used to meet both household and medical expenses. Critical illnesses covered under the plan may vary from one company to another.

Critical Illness Rider:

When you opt for Critical Illness Rider with your basic insurance, the policy pays a lump sum amount if you are diagnosed with any illness covered under the policy.

Some of the critical illnesses covered in this rider include heart attack, kidney failure, cancer, coronary artery bypass, major organ transplant, paralysis, stroke and many more.

On diagnosis of the covered condition, the insurance can either continue or terminate depending on the terms and conditions.

Some insurers may provide less coverage after reducing the amount paid to you as a lump sum on diagnosis.

Benefits of Insurance Riders

A number of benefits are offered by the rider to extend the coverage of the existing plan:

better protection

The most important reason for adding riders to your life insurance policy is that you want to protect your family from various risks. There is no doubt that death is the ultimate source of financial problems for the family.

Accidental losses and life-threatening illnesses with expensive treatments, however, can be just as distressing, if not more. Adding riders to your life insurance policy gives it greater value and better protects your family.

One of the most important reasons for adding riders to your life insurance plan is that you want to protect your loved ones against multiple risks. Undoubtedly, death is the ultimate cause of the financial problems of the family.

But, life-threatening diseases, sudden disability as well as expensive treatments equally destroy your life. Therefore, adding riders to your life insurance policy adds more protection to the plan and secures the future of your family.

Additional Coverage:

By adding riders to the base life insurance plan, wider coverage can be enjoyed. For example, the Critical Illness Rider benefit pays a lump sum amount which can be used towards loan EMIs, household expenses and other financial liabilities.

Flexibility:

You can attach a rider to any of your life insurance plans such as Term, ULIP, Whole Life, Endowment and customize your plan as per your needs.

Affordability:

Buying a rider is more affordable than purchasing an individual insurance plan. Additionally, there are a variety of riders that one can choose from according to their needs. Hence, it becomes easier to provide coverage at low premium rates.

tax benefits:

Riders are add-ons to life insurance policies. Hence, insurance riders paid as per the prevailing income tax laws also enjoy tax saving benefits.

Insurance riders come with certain conditions and terms; There will be no premium amount in respect of health related or critical illness rider benefit

The premium under the term plan should not exceed 100 per cent of the amount, the total premium amount under all other riders shall not exceed 30 per cent of that under the base plan and any benefit arising under each defined rider benefit shall not exceed the SA amount. Will not happen under the base product.

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