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Make Your Life Insurance Policy More Robust With Riders

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Make Your Life Insurance Policy More Robust With Riders
Jose John - 27 August 2019

What is a rider?

Riders are add-ons to increase the benefits of your life insurance policy. They are entirely optional supplements which can be hooked onto a basic life insurance plan to broaden its scope. Riders render additional benefits that not only offer customization to meet the requirements of individuals, but also increase their financial protection.

Let us begin with a simple example. When ordering a pizza, we often find ourselves spoilt for choice with the wide array of topping options available. Offering an assortment of distinct flavors, these toppings give us the freedom to customize our pizza the way we want while lifting its overall taste. Quite naturally when friends and family ask, what the most common way to increase cover and create a valuable life insurance plan is, my answer is ‘Riders’.

Like pizza topping, riders too are entirely optional add-ons that are designed to address a variety of unique customer requirements. Riders can be bought on the base policy and mixed and matched based on one’s preferences, at a small additional cost. Rather than going through the hassle of buying a new policy altogether, riders let you customize the benefits, thereby maximizing the value of your existing life insurance policy.

Plethora of riders to choose from

With lifestyle and dietary habits having undergone significant change, we are now at a greater risk of falling prey to various heart and kidney ailments, cancer and other chronic diseases. Treatment of these illnesses is an expensive affair that can run into lakhs depending on the type, stage and severity of the disease. While conventional health insurance policies do cover hospitalization expenses and reimbursements, the sum assured offered is rarely enough to cover the costs. The need for a Critical Illness Rider under the life insurance policy that ensures a lump sum amount to the policyholder upon being diagnosed with any of the critical illnesses specified in the policy is therefore extremely important for giving you and your family a financial protection that is needed during these times.

Under critical illness too, there are two types of cover- accelerated and additional, to choose from. An accelerated cover is cheaper as the critical illness sum assured is a part of the base sum assured. Additional rider is different in that it has the critical illness sum assured over and above the base sum assured. In either case, the insured is given a lump sum payment if he/she is diagnosed with any of the life threatening critical illnesses specified by the life insurer.

As per data by the World Health Organization, road traffic injuries are the leading cause of death globally for children and young adults aged between 5-29 years. Additionally, of the total number of road traffic deaths, 90 percent occur in low and -middle-income countries. One of the ways of mitigating the impact of unfortunate occurrence of such situation, is by investing in a robust Accidental Death and Dismemberment rider that can help battle the financial constraints which may befall upon a policyholder’s family in the case of sudden death or disablement of the life insured.

There are situations where due to the critical illness, dismemberment or death, paying of life insurance policy premiums may not be possible. To ensure continuity of the policy, a Waiver of Premium rider is a very good choice. Under this rider, should the policyholder die, become critically ill, or disabled due to dismemberment, all future premiums will be waived off, subject to terms and conditions.

Additionally, investment savvy persons who have invested in traditional or ULIP based insurance plans, can consider buying a Term Rider to enhance financial protection. A term rider can help add greater value to the policy by offering additional term coverage for the amount specified.

Why should you buy?

Instead of purchasing multiple plans for your needs, one or more riders can be added to your standard life insurance policy to create a more robust plan against risks which are specific to you and your family. Subject to rider conditions, riders can be incorporated to any policy, be it a term plan, ULIP, endowment plan or even a whole life plan during the time of purchase, or even later, depending upon your life stage requirements.

Besides, riders are available at reasonable costs and keep your total premiums in check, making them a wise tool to enhance financial protection.

The author is Director & Appointed Actuary – Max Life Insurance

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