Adding firepower to the term plan

Opting for the right riders to go with a term insurance policy can prove beneficial

A term life insurance plan is a cost-effective, pure-protection life insurance product that has become essential given unprecedented times such as the ongoing COVID-19 pandemic.

Under such a plan, the policyholder pays a small amount as premium and if the he or she dies within the policy tenure/term, the financial dependents of the policyholder receive a large cover amount as a payout. For example, a 25-year old person can get a life cover of ₹1 crore for 25 years at a premium of about ₹500 per month.

The payout amount can be used by the dependents to meet daily expenses, repay loans and pay one-time expenses such as children’s education and or for wedding.

Apart from the regular death benefit, a term life insurance the plan also provides additional financial benefits provided you have bought the necessary riders. Riders are like accessories that are to be purchased along with the base policy.

Attaching the right riders to your term-life insurance plan gives the plan extra firepower, making it more comprehensive and beneficial for you, the customer. The cost of the riders is over and above the base policy’s premium though, generally, the premium for the riders is low. Here are some of the most important riders that you must add with your plan to avail enhanced coverage.

Critical illness

Over the last decade, there has been a significant rise in the number of people affected by critical illnesses. Some of the prominent reasons for this spike are a rise in levels of pollution, unhealthy eating habits, and a sedentary lifestyle.

While it is important to follow a healthy lifestyle, it is equally important to stay financially protected in case an illness strikes you. Under this rider, if the policyholder is diagnosed with any of the listed illnesses — these usually vary basis the plan or the insurer and cover between 8 and 60 illnesses — the insurer pays the rider cover amount as a lump sum.

For instance, say Amit Kumar has a ₹1 crore cover along with a critical illness rider of ₹25 lakh attached to it. Now, if Mr. Kumar is diagnosed with a critical illness, say heart attack, his insurer will pay him ₹25 lakh on diagnosis without any connection with your hospital bills. While few people have health insurance to pay for hospital bills, a person’s lifestyle undergoes a huge change upon diagnosis of a critical illness and may not be able to perform his/her duties at earlier levels.

Hence, the amount received can be used to take care of loss of income due to early retirement or moving to a less-stressful/low-paying job that such people see post diagnosis of a critical illness

Waiver of premium

Under the waiver of premium rider, all the future premiums of the plan are waived and the plan continues to remain active until the policy tenure/term. This is very helpful when someone is at a stage where their income is affected or they are no longer in an earning position.

Currently, there are two different variants of this rider available namely — waiver of premium on disability and waiver of premium for critical illnesses. Under the waiver of premium on disability rider, if the policyholder meets with an accident and becomes completely disabled physically, all his future premiums will be waived and the base term policy will keep working.

Similarly, if one chooses to select waiver of premium for critical illness and the person is diagnosed with any of the listed critical illnesses, all the future premiums are waived while the base policy continues to work normally.

Accidental disability

Every year, more than 10 lakh road accidents are reported in India whereby a lot of young people are left disabled. While the plan takes care of your family’s future expenses, disability is another bad situation to end up in where the person may not be able to work and earn for the family.

In such conditions, this rider comes to the rescue of such people by paying the rider-cover amount that can be used to take care of loss of income due to the situation. It is highly recommended for people who travel frequently or those whose daily commute is more than an hour.

It comes out clear that riders help give a upgrade a term-insurance plan. They help us to plan our family’s future more effectively. Based on our lifestyle, source of income and work conditions, we must choose the appropriate riders.

Various insurance companies in the market offer term-insurance policies and many more riders at competitive rates. One must compare and understand the rider benefits, associated terms and conditions carefully before making a decision.

(The writer is Business Head, Term Insurance,

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