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Ask Mint | Riders increase insurance cover

Ask Mint | Riders increase insurance cover
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First Published: Sun, Dec 21 2008. 10 58 PM IST

Updated: Sun, Dec 21 2008. 10 58 PM IST
The insurance business in India isn’t just growing, but also becoming more sophisticated in terms of product offerings. To help readers keep ahead of developments in this business, Mint features a Q&A on insurance every Monday.
Why should one invest in riders on insurance plans? What are the benefits?
A rider on the insurance contract provides additional protection against risk. You can buy a basic insurance policy and add riders to the policy to include extra protection such as additional accidental death cover, disability cover, critical illness cover and hospitalization benefits.
Although you need to pay an additional charge towards rider coverage, these additional charges are normally lower than individual policies that provide the same benefits.
Premiums on riders are lower than the same cover bought as a separate policy because the insurance company’s administration costs are lower. In other words, riders provide low-cost pure risk cover. However, they have to be bought along with the base policy at inception; you cannot keep adding riders through the tenure of a policy. Riders, if selected properly based on your insurance needs, can add great value to your life cover.
I have been approached by an agent to buy a child plan and hence wanted to know what are the advantages of buying one.
While you may well have a financial plan in place for your own future, it is equally vital that you make similar provisions for your child’s future. There are a variety of child insurance plans available, which are tailor-made to act as a savings tool to secure your child’s future.
Child plans help address your child’s future education and/or marriage needs. They also provide the capital that your child may need at a later stage to venture into a business. The earlier you start investing, the higher would be the fund value of your policy on maturity.
Readers are welcome to write in with their queries to askmint@livemint.com. The questions will be answered by senior executives from leading insurance firms.
This week’s expert is T.R. Ramachandran, managing director and CEO, Aviva India.
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First Published: Sun, Dec 21 2008. 10 58 PM IST