Here’s what you should know about term insurance riders

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A term insurance rider provides additional protection or extra cover to a term insurance policy that comes at an added cost. 

These riders come with additional benefits that can help the insured in many cases. However, it is not always essential that all such riders are suitable or needed by everyone . 

This piece examines the importance of such riders and what needs to be done before you can opt for one.

Rakesh Goyal, director, Probus Insurance, said, “Riders such as accidental death benefits would be ideal for someone whose work profile or daily routine involves greater danger due to accidents. However, the basic sum assured, which is applicable under the insured’s term plan, would be valuable even if the policyholder does not avail of this rider.” 

“On the other hand, disability riders and waiver of premium riders could benefit only those under minimum or moderate risks pertaining to accidents  and disabilities arising out of these.  Critical illness riders are for those who might be at a higher risk of getting such diseases. These riders provide benefits and limited lump sum amount that the dependents or other family members can utilize in non-working situations due to illness,” added Goyal. 

The options: You must always compare the available rider options to ensure that the benefits align with your expectations or needs. 

Go with the rider that helps you in the best way possible during the time of need. 

Sajja Praveen Chowdary, head, term life insurance, Policybazaar.com, said, “A rider comes into action when the specified event for which you purchased the term insurance rider occurs. As a policyholder, you must select the appropriate rider in order to receive the required benefits on time.” 

The exclusions: There can be situations where the rider may not provide coverage for specific diseases or illnesses. Hence, you must read the policy documents carefully and wisely choose any rider to avoid any unpleasant surprises during the claim process. 

“Some exclusions are consumption of alcohol and drugs, death owing to a pre-existing illness, critical illness arising out of internal and external congenital disorders, self-inflicted injuries, hormone replacement surgery, any dental or cosmetic surgery and so on,” said Ankit Agarwal, CEO and co-founder of InsuranceDekho. 

Tax benefits: When you buy term insurance, you get tax benefits. Hence, while availing these sops, make sure you verify the tax benefits available when adding any rider to your actual term plan. 

Agarwal said, “The maximum amount you can claim under Section 80C is 1.5 lakh in a year. The limit includes other eligible investments.  Besides, you can avail of tax benefits under section 80D of the Income Tax Act for health insurance plans that includes plans with critical illness benefits”.

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