What are Riders in Life Insurance and how they are useful for us?

Life insurance agents while selling insurance policies, often ask us if we would like any riders to be included in the policy. If we choose to add riders to any policy that we buy we need to pay the additional cost which will be reflected in the premium amount. In this article let us get to know what these riders are and if we should include them in our policies at an extra cost.

What are riders in life insurance?

We can define riders as the additional benefits added in the primary life insurance policy which offer cover in case of a specific eventuality. It must be noted that this additional financial cover is over and above the basic sum assured in a life insurance policy. Buying riders will cost the policyholders extra money based on the type of rider. The extra money will be added to the premium amount.

Riders are applicable in case of some predefined events. But even with the occurrence of events, the life cover remains intact. This means that if we have a rider for a particular event and suppose that event occurs and the rider is used up, even then the insured is eligible for the death benefit on the insurance plan.

Also read ; Understand the 5 types of life insurance policy before buying.

Some basic and important riders

 Guaranteed insurability rider

Generally, while purchasing life insurance many aspects of the insurer such as age annual income etc. are taken into account. If the insurer is above the age of 45 a medical test is needed to buy the insurance. We can avoid the medical test by including the guaranteed insurability rider. This rider allows the insured to purchase additional insurance coverage in the stated period without a need for further medical examination. These riders end at a certain age.   

            Accidental death benefit rider

This rider pays an additional amount (depending on the type of life insurance) if the insured dies as a result of an accident (“accident” as defined by the insurance company). Normally the additional amount paid by this rider is equivalent to the sum assured of the policy, which doubles the benefit. That is to say in the event of death due to bodily injury, the insured family gets twice the amount of sum assured. Hence, this rider is also sometimes called a double indemnity rider.

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3.       Term rider

In case of death of the policyholder, the nominee receives a specific amount monthly over and above the death benefit offered by the policy. This amount can be thought of as a monthly pension for the family. This rider can be essential in the case where the insured is the sole earner in the household.

4.      Wavier of premium rider

In case if the insured becomes permanently disabled or loses their income due to an injury or an illness before a specific age or as per the terms dictated by the rider, future premiums are waived off. That means the policy will be active and the insurance company will pay the premium for the policyholder and the policyholder does not need to pay the future premium installments, the benefits however can only be used after the maturation of a policy. This kind of rider can be useful when the insured is the head of the family or if the premium amount is high.

5.      Disability rider

The insured with this rider on his/her policy receives benefits from the rider on being afflicted with a disability. The term “disability” is defined differently by various insurance companies. Also, these riders depending on the insurance provider cover different types of disabilities and benefits associated with them. So, it is advised to go through the terms and conditions before buying this rider.

Also read; How to choose the best Health insurance policy?

6.      Accelerated death benefit rider

Sometimes life can present us with unprecedented situations and challenge us financially and mentally, to maneuver our way around these predicaments we need life insurance policies. One such instance is the case of diagnosis of a terminal illness. The accelerated death benefit rider is specifically designed for such instances. On the application of this rider, the insurers offer an advanced percentage of the death benefit of the base policy to the insured however, upon the death of the insured the amount offered in advance may be subtracted (with interest) from the sum assured. This rider is very crucial as no one can predict a terminal illness and the cost of treating one is very high. The advance amount will help in the treatment of the affected (insured) more effectively.

7.      Long term care rider

If the insured has to stay at a nursing home, extensive care center, or receive home care, this rider offers monthly payments to the insured. There are long-term care insurance plans specifically designed for this purpose that can be bought individually, however, riders on the existing plan can also be opted for.   

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8.      Child term rider

There is no minimum age to buy a life insurance policy. The sooner we buy the policy we get better benefits and lower premium costs. A life insurance policy can be taken even for a newborn, and it is here that this rider comes into the picture. In some tragic cases, the newborn or infant does not survive due to some illness. The child term rider on insurance in such case death benefit in case a child dies before a specified age (depends on the insurer). In case the child survives the specified period, the term plan can be converted into permanent insurance.

Are riders essential?

Most insurers have insurance plans that they design with specific terms for each plan varying. Hence, a customer buying life insurance cannot customize his insurance plan according to his needs completely. Riders provide an extent of customization for the customer to evaluate his needs and accordingly adjust for his coverage. It is important that before opting for any rider the insured needs to go through the terms of the rider thoroughly. If needed, don’t shy away from consulting a financial expert or an insurance advisor.