Types of Riders in Insurance Policy

• 10th Dec 2018
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You try your best to provide a wonderful life to your loved ones. You work harder to ensure that you are able to make their lives comfortable and give them all the luxuries.

However, life is uncertain and you never know when an unfortunate event may strike. To protect you and your family against any financial difficulties during these unforeseen circumstances, you must opt for an insurance coverage. A life insurance plan provides the policy’s benefits to your beneficiaries in case of an untoward incident due to an accident or other such events.

A basic insurance coverage ensures the financial security of your loved ones in your absence. However, you may enhance the coverage by including riders in insurance policies. Such riders may be availed when you purchase the insurance policy. In most instances, these additional riders are available at a slightly higher premium.

The maximum coverage available under the insurance policy depends on the basic sum assured and the different types of riders included with your plan. However, it is important to remember that the total premium on various riders is not more than 30% of the premium paid for your basic policy.

Here are the different riders that may be included in your insurance policy:

Accidental death benefit rider

You may pay a single, limited, or regular premium for procuring coverage under this coverage. With the help of this rider, your beneficiaries receive the additional benefits, in case of an unfortunate incident due to an accident. There may be an upper limit on the maximum sum assured under the accidental death benefit rider, which varies from one insurer to another.

Critical illness rider

When you include critical illness rider with your basic insurance, the policy pays a lump sum amount in case you are diagnosed with any of the illnesses covered under the plan. Some of the critical illnesses covered in this rider include heart attack, renal failure, cancer, coronary artery bypass, major organ transplant, paralysis, stroke, and several more. On a diagnosis of the covered condition, the insurance may either continue or end depending on the terms and conditions. Some insurers may provide lower coverage after reducing the amount paid to you as a lump sum on diagnosis.

Permanent disability rider

If you are permanently disabled in an accident, this rider is available. When you include permanent disability rider with your basic plan, the insurance company may pay a periodic amount to you for a certain period of time. You may combine this cover with the accidental death benefit rider. This rider provides you with an assurance of an income when you are unable to work due to an accidental disability.

Income benefit rider

This rider is recommended if you are the primary earning member in your family. In case of an untoward event during the policy term, your beneficiaries receive additional income every year for a pre-specified period. This is available over and above the regular benefits available under your basic insurance plan.

Waiver of premium rider

If you are unable to pay the premiums due to an accidental disability or loss of income, these future payments are waived by the insurer. Your inability to pay the premium does not result in the loss of coverage ensuring all benefits under the policy are available. If you do not include this rider and are unable to pay the premium on time, all the benefits offered by the insurance policy are lost.

You may include several rider types in an insurance policy. However, before you choose on the ones that must be included, it is recommended you understand the various benefits, inclusions, and exclusions. Additionally, you must compare the additional premium you will have to pay to include these riders. It is important you take the time to evaluate and analyze various riders to make the right choice.

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- A Consumer Education Initiative series by Kotak Life