Riders that can make term insurance policy comprehensive

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Term insurance policies are tailored in such a way that, in the event of the policyholder’s untimely death, the beneficiaries get the sum assured as a lumpsum payment or a monthly income, depending on the dependents’ preferences. The insured pays the premium to the insurer until the policy duration expires and is covered by the policy for this duration in the event of his or her death. In term insurance, the policyholder can add more features to the policy to get more comprehensive coverage. These additional covers are known as riders. 

Sanjiv Bajaj, joint chairman and MD, Bajaj Capital, said a policyholder could buy a term insurance rider by paying an additional premium amount. Most plans allow the addition of riders at the time of policy inception, while others allow rider addition at policy anniversary. “You must also know that a rider normally comes into action when the specified event for which you had purchased the policy occurs. Therefore, later on, if you do not want to continue the rider protection benefit, you can intimate the insurer and stop paying the rider premium while continuing your base term policy benefit as it is,” said Bajaj. 

Following are some of the riders you can add to your policy to make it more comprehensive. 

Income Benefit Rider: This rider is an addition to an existing term insurance policy that pays out an amount equivalent to the policyholder’s monthly income to the beneficiaries. The dependents receive additional income for around 5-10 years. John Mayne, executive director, Coverfox Insurance, said, “If you wish to provide a regular income facility to your family in your absence, you have the option to break your death benefit payout over a period of time, wherein that amount can help them to run their household expenses “. 

Critical Illness Rider: This rider helps cover critical illness costs during in-hospital and out-of-hospital stays. Sajja Praveen Chowdary, head, term life insurance, Policybazaar.com, said many covid survivors were found to have developed comorbidities, some of which resulted in significant critical illnesses such as heart attacks, coronary artery bypass surgery, and neurological problems, etc. 

“So, if one doesn’t have a comprehensive term policy, these diseases can wreak havoc on one’s finances. Thus, it is better to have a term plan with a critical illness benefit as a rider.” 

If you get diagnosed with any critical illness disease, the rider gives you a lump sum payout. The rider can provide much-needed financial flow during the recovery period. Further, the term insurance policy payout is paid to the nominees if the insured dies of any critical illness. 

Waiver of Premium Rider: This rider ensures that the insurer will waive off the policyholder’s future premiums if he cannot pay them due to a loss of income or disability. The important aspect is that the insurance coverage still remains in effect. This way, the rider essentially ensures the payment of all your premiums until the policy expires.

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