Purchasing a term insurance policy is one of the preferred ways to protect your family from the uncertainties of life. Not only is it easy enough to do, but is also very cost-effective. That said, many tend to equate term insurance benefits with something that is connected only with the death of the insured. However, that is simply not the case. There are several term life insurance plans that also cover other contingencies like accidents or disabilities suffered by the insured.
To understand more about this, let us first look at the fundamentals –
What is term insurance?
Also known as a term life insurance, a term insurance policy, is essentially a contract that you enter into with an insurance provider for a specified tenure. Here, the insurance provider takes on an obligation to provide your beneficiaries/nominees with a certain predetermined sum of money in the event of your demise during the policy tenure.
This "death benefit" that the insurer provides is a financial compensation which can then be used by your beneficiaries/nominees to satisfy their life goals. In exchange for receiving this coverage, you are required to make periodical payments known as premiums to the insurer. For instance, let us say that you avail a term insurance policy with a ‘death benefit’ of Rs. 20 lakhs for a tenure of 20 years. Say you would be required to pay Rs. 10,000 each year until the end of the tenure to enjoy this life cover. In the event of your death during the policy tenure of 20 years, the insurer is obligated to provide the sum of Rs. 20 lakhs to your beneficiaries/nominees as compensation. This is the most basic of term insurance benefits.
Since they are pure protective covers, term life insurance usually tends to charge a much lower amount of premium than other traditional life insurance products.
What is a term insurance rider?
Apart from the death benefit, term insurance plans often come with riders that offer other benefits to the insured or his family. A term insurance rider is an add-on to a term plan, and it offers you additional benefits over and above what the base plan offers. You can opt for these add-ons at the time of purchasing a term life insurance plan by paying an additional amount.
Essentially, a term plan with a rider allows you to maximize your term insurance benefits, since it offers you an additional cover. There are multiple different riders with various benefits for you to choose from. Some of the most common ones are –
• Accidental death benefit rider
• Critical illness rider
• Waiver of premium benefit rider
• Family income benefit rider
• Accidental permanent total or partial disability rider
Here’s some more information regarding disability coverage that can be added to base term insurance plans –