Term Insurance Rider

What are Term Insurance Riders?

A rider in term insurance is an optional add-on added to your main life policy. It’s an extra layer of protection you can choose based on your life situation. For example, if you want your plan to also cover critical illness or accidental disability, you can simply add a suitable rider instead of buying a separate policy.

These add-ons make your term insurance plan more flexible and practical. You pay extra premium, and in return, you get support, beyond just life cover. That’s why many people go through the term insurance riders list before finalizing their policy.

What are the Benefits of a Term Insurance Rider?

Adding riders means you’re better prepared for unexpected situations like major illness, disability, or accidental death.

Increased Sum Assured

A term insurance rider can boost your overall coverage amount without the need for an additional policy. For example, an accidental death rider adds an extra sum assured on top of the base plan payout, creating a larger financial cushion for your family during tough times.

Complete Protection for Family

With a rider in term insurance, your family gets protection beyond just the basic death benefit. Riders like critical illness rider ensure that if you face a health crisis, your family’s financial stability isn’t shaken.

Affordable

One of the major term insurance rider benefits is affordability. Riders come at a nominal extra cost compared to buying separate policies for critical illnesses or accidental coverage.

Tax Advantages

Riders also qualify for tax deductions under life insurance plans, subject to the provisions of the Income Tax Act, 1961. Premiums paid for riders like critical illness riders can be claimed under Section 80D, while others are clubbed under Section 80C, in case of old tax regime. This makes a term life insurance with riders, both protective and tax-efficient.

Types of Riders Available with Term Insurance

The term insurance riders list below explains the common rider types and how they work:

1. Accidental Death Benefit Rider

   This rider provides an additional payout if the life assured dies due to an accident during the policy term. It adds another layer of financial security by increasing the total benefit received by the nominee.

   
   

2. Waiver of Premium Rider

   If the life assured becomes permanently disabled or critically ill and cannot continue premium payments, this rider ensures that all future premiums are waived off.

   
   

3. Critical Illness Rider

   Offers a lump sum payout if the life assured is diagnosed with any of the specified critical illnesses listed in the policy. This amount can be used for treatment, recovery, or any other financial need during a health crisis.

   
   

4. Family Income Benefit Rider

   Provides a regular income to the nominee in case of the life assured’s death during the policy term. It helps the family manage ongoing household expenses and maintain their standard of living.

   
   

5. Permanent and Partial Disability Rider

   This rider supports you in case of long-term physical injuries from an accident. If the disability is total or partial but permanent, a lump sum benefit is paid.

   
   

6. Terminal Illness Rider

   Under this rider, if you’re diagnosed with a terminal illness, the life assured gets some portion of death benefit in advance. This allows you to manage medical bills, secure your family’s future, or fulfil personal goals with dignity.

   
   

Reasons You Need a Rider in Term Insurance

There are many benefits of adding riders to term insurance. However, some of the common benefits which make choosing riders a good choice are as follows –

1. Added protection

   One of the primary rider benefits is the added protection that it provides. Whichever rider you choose; you get an added layer of protection against unforeseen eventualities which might cause a financial loss.

   
   

2. Coverage for contingencies other than death

   While the term plan covers the risk of premature demise, the riders can provide coverage against medical emergencies, critical illnesses and disabilities. They pay a benefit in any of these contingencies (depending on which rider you choose) and extend financial assistance when you need it the most.

   
   

3. Minimal premium

   Riders are very cost-effective. The rider premium is low making it affordable. You can enjoy a high rider sum assured at low additional premiums on the base plan so that your coverage is enhanced without burning your pockets.

   
   

4. Tax benefits

   The rider premiums are clubbed with your term insurance premium and allowed as a deduction under Section 80C of the Income Tax Act, 1961 up to Rs.1.5 lakhs2 subject to the terms and conditions stated therein. This is available for term insurance riders like accidental death riders, accidental death and disablement riders and any other rider which does not offer health insurance-related coverage². For riders like critical illness riders, hospitalisation coverage riders, terminal illness riders, and others who provide health-related cover, the rider premium is allowed as a deduction under Section 80D up to Rs.25,000 if you are below 60 and Rs.50,000 if you are a senior citizen2.Above benefits are available only under old regime of Tax.

   
   

The Process of Buying Term Insurance Riders

You can choose to buy term insurance riders with your base policy when buying the base policy. Many policies also allow you to add the rider to the coverage during renewals. You can buy the riders online or offline depending on your suitability.

Key Facts You Should Know About Term Insurance Riders

Adding riders to your term insurance plan may seem like a small decision, but it can make a big difference when life takes a turn. If you’re still unsure whether to go for term life insurance with riders, these points might help you decide:

• Riders are optional: Riders are not mandatory add-on’s, but the right ones can make your coverage more comprehensive.
• They must match your needs: Not every rider is useful for everyone. For example, if you already have health insurance, you might skip a critical illness rider.
• They have their own terms: Riders often have a different tenure or payout condition than the main policy. Always check the fine print.
• You can’t buy them standalone: A rider in term insurance only works along with the base plan. It’s not a separate policy.
   

Conclusion

Choose suitable riders with your term insurance plan and enjoy the benefits of added coverage, enhanced financial security and tax benefits at minimal premiums. You can cover other contingencies too and get complete peace of mind with an inclusive scope of coverage. So, assess your coverage needs and then make your term plan comprehensive with the necessary riders.

FAQs

1. Is there a medical examination required to add a rider to my term policy?

   Usually, no medical examination is needed to add a rider to your term policy. However, in some cases, a medical examination might be needed by the insurer before the rider coverage is granted.

   
   

2. Can I convert a term insurance rider into a permanent policy later on?

   Usually, a rider cannot be converted into a permanent term insurance policy. It is added to the basic policy and runs till the base policy runs or till the tenure of the rider. You cannot buy the rider separately.

   
   

3. Can a term insurance have add-on riders?

   A term insurance plan can have multiple add-on riders. You can usually select them while buying the policy or during specific policy anniversaries, depending on your insurer’s terms.

   
   

4. How does the accidental permanent total and partial disability benefit rider work?

   If you suffer a permanent or partial disability due to an accident, this rider pays out a lump sum. This amount can help with treatment, recovery, or any long-term lifestyle changes you may need to make.