One-minute guide: Riders on term insurance plans
It’s the time for giving proofs of investment to your employers, for getting tax breaks. To this end, many people may look to buy a term life insurance plan, as its premium is a deductible under section 80C of the income-tax Act.
But gone are the days when a term plan was just another insurance cover. Now they range from catering to life stage needs to enhancing the cover through riders. Some of these benefits are included in the premium, and for others you have to pay more.
Terminal illness cover: In case the policyholder is diagnosed with a terminal illness, a guaranteed percentage of the sum assured will be paid. Once paid, the death benefit will be reduced by this amount.
Life stage benefit: This offers to increase the sum assured by a certain percentage at major life events, such as marriage or birth of a child. For example, for Aegon Life Insurance Co. Ltd’s term plan, one can increase the sum assured by 50% on marriage, 25% on the birth of the first child and another 25% on the birth of the second child. Some companies may recalibrate the premium for this rider.
Critical illness cover: This is a rider and provides additional sum assured, apart from the sum assured for the policy. This amount is paid if the policyholder is diagnosed with a critical illness specified by the insurer.
Permanent disability: With this rider, 100% of the rider sum assured is paid in the event of total and permanent disability of the policyholder due to an accident.
Waiver of premium: In this benefit, the future premium payments are waived off under certain conditions, such as: in cases of accident or disability. Although it is a less popular rider with term plans, some insurance companies do offer it.
Accidental death: In addition to the sum assured, an additional amount will be given in case of death due to accident.
Although these riders are beneficial in giving additional cover to your term plan, do remember to go through the policy brochure carefully before buying them.