What are Term Insurance Riders: Types, and Benefits

Delving into the types and benefits of term insurance riders is crucial for tailoring a comprehensive plan to match individual needs. These riders, available at a nominal cost, amplify the protective shield, encompassing critical illness cover, disability cover, accidental death cover, and more. Let's explore the world of term insurance riders and uncover the added layers of financial security they bring. 

Term Insurance Riders

Term insurance riders are crucial enhancements to your insurance plan, providing various advantages. These riders, available at a marginal additional cost, provide extra protection, including critical illness cover, disability cover, accidental death cover, and more. They play a significant role in fortifying the protection offered by an existing plan. Opting for optional benefits like critical illness cover through riders can offset the costs associated with treating severe and financially burdensome illnesses. 

Types of Term Insurance Riders

Accidental Death Benefit Rider

If the insured passes away due to an accident, an extra amount is added to the sum assured. The additional sum is determined by the initial sum assured and may differ between insurers. The premium for this rider remains constant throughout the entire policy term, though certain plans might set a limit on the maximum sum assured.

Accidental Disability Benefit Rider

This rider offers advantages for partial or permanent disability due to an accident. Generally, term insurance plans provide payments for 5-10 years after the disability incident. If the policyholder faces a disability from an accident, this rider serves as a source of income, especially when combined with the accidental death rider.

Critical Illness Benefit Rider

In the event of a terminal illness diagnosis, this benefit offers an upfront payout from the sum assured. It serves to alleviate financial burdens associated with medical expenses for conditions like cancer, asthma, and kidney failure, ensuring timely support during challenging health circumstances.

Waiver of Premium Rider

If the policyholder experiences disability or income loss, this feature exempts future premium payments, ensuring the policy stays active even if the insured can't pay. It's usually offered at the policy's start and may have state-specific availability. Meeting age and health criteria might be necessary to add this rider.

Income Benefit Rider

When obtaining your coverage, you have the option to purchase this by paying an additional premium. The policyholder's family will receive an additional annual income from the term insurance with an income benefit rider, and the regular sum insured will last for five to ten years.

Child Support Benefit Rider

The child support benefit rider is a crucial addition to your term insurance in the event of the parent's death who holds the policy. This rider prioritizes meeting the child's needs, allowing them to pursue milestones and goals without financial constraints.

Benefits of Term Insurance Riders

Enhanced Sum Assured

Benefits of term insurance riders include the enhanced sum assured, providing increased coverage. Certain policy combinations, such as term insurance with an accidental death benefit rider, offer additional financial protection, augmenting the overall coverage provided by the policy.

Protection for Family

Riders on term insurance provide the insured's family with financial stability. In the unfortunate case of an accident, incapacity, or diagnosis of a critical or terminal illness, these riders offer recipients additional financial help beyond the basic policy.

Affordable

Term insurance riders are a cost-effective way to ensure better financial security in the long run. Buying separate covers can be more expensive. Adding riders to an existing plan can be a lot more affordable.

Tax Benefits

Just like the tax benefits you get for the premium of a term insurance policy under Section 80C of the Income Tax Act, riders also offer tax advantages. You can claim deductions for premiums paid towards the accidental death benefit rider under Section 80C and for the critical illness rider under Section 80D, following the conditions specified. Under Section 80D, individuals are eligible for deductions on health insurance premiums paid for themselves, their spouse, and dependent children. There's a maximum limit for this deduction. Additionally, extra deductions can be claimed for health insurance premiums paid for parents, depending on whether they're senior citizens.

Conclusion

Riders are elective and activated under specific conditions, proving especially valuable in unforeseen circumstances. The assured sum for riders usually falls below that of the primary term insurance policy, and the premiums are generally more economical. The rider's duration cannot surpass the term of the base policy. This flexibility allows policyholders to tailor their coverage according to individual needs. Opting for a term insurance rider is a personal decision, extending coverage with the existing insurer. Before incorporating riders, thoroughly examine associated benefits, inclusions, and exclusions to make a well-informed decision that aligns with your requirements.