Should you opt for a Rider with your life insurance policy?

So, you have a life insurance policy to help your dependents overcome the loss of income in case of your untimely demise. But, have you thought what happens if this loss of income occurs during your lifetime because you have met with a serious accident or contracted an illness which does not permit you to work. Pretty dreadful thoughts, but a contingency one needs to consider and plan for. Also, would your life insurance policy be of any help in such difficult times. Yes, it would be, in case you have opted for Riders. And, what is a rider?

Riders are add-on benefits that can be added to the basic life cover for additional coverage. There are different types of riders and the policyholder may choose one or more riders as per his requirement. Some of the common riders offered by life insurance companies in India are:

Accidental death/disability rider – This rider covers death that occurs due to an accident and disabilities caused by an accident. In case a life insured who has opted for this rider dies in an accident, his nominees are paid the rider coverage amount in addition to the basic policy’s coverage amount.

In case of any disability or dismemberment caused by the accident, the insurance company would pay a percentage of the rider coverage amount depending on the nature of the disability/dismemberment. The percentages applicable and types of disabilities/dismemberment are mentioned in the product contract.

Critical Illness rider – In case the life insured is diagnosed with any one of the diseases covered under this rider during the policy term, the insurance company will pay the rider coverage amount in lump sum. This amount can be used for medical/hospitalization expenses or for day to day expenses. Unlike a Mediclaim policy which only reimburses the expenses incurred, this rider pays the entire coverage amount subject to the terms and conditions of the policy contract. The most common illnesses covered are Cancer, Heart Attack, Kidney failure, Paralytic stroke and Cardiac surgery. The list of diseases varies among companies.

Term rider – This rider provides additional benefit on death over and above what the basic policy provides. It is paid only in case of death. This rider is best to increment your existing insurance cover without buying a new policy. For eg: A young man who had taken an insurance policy for a minimal coverage amount (as he had limited family responsibilities) at the beginning of his career may opt for this rider to enhance his cover post marriage or on having kids to take care of his increased family responsibilities.

Waiver of premium (WOP) rider – As the name suggests, this rider provides for waiver of future premiums in case you become seriously ill or disabled and are not able to work.

The future policy premium (including those of attached riders) will be waived and the policy will continue uninterrupted. The life insurance company would need necessary evidence prior to waiving the future premiums. There is no monetary payout given to the policyholder under this rider.

The WOP rider is very useful in child plans. In case of the untimely demise of the premium paying parent, the future premiums are waived and the policy continues uninterrupted and accrues the desired benefits.

Thus, riders help to derive optimum benefits from your life insurance policy at a nominal cost. Further, you need not renew your rider separately as premium dues dates for the base policy and the rider are same. Riders are much more affordable than standalone accidental death and critical illness policies. Riders can be added during issuance of the policy or post-issuance. Similarly, they can be deleted on a later date. However, addition and deletion of riders are subject to the rules of the insurers.

In case you feel the need to add a rider to your existing policy, do approach your insurance company or if you are buying a fresh policy do keep in mind the benefits riders offer and decide accordingly.