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Different Types of Riders in a Life Insurance Policy

Tuesday, May 14, 2013 | Category : Insurance | 0 Comments
A rider is an additional cover over and above your insurance policy. Riders are commonly understood as added benefits that one can opt for along with a base policy. Insurers provide riders as add-on covers to enhance the scope of a life policy. They cover risks that are beyond the scope of the main life policy, resulting in a more comprehensive protection. 

The most common types of riders cover critical illness, personal accident, accidental death and disability and can waive off future premiums in case of unfortunate demise or disability to the policyholder. These add-ons step in during situations where the main life insurance policy may not come into play. 

Most common types of riders offered in India are:
 
1. Accidental Death Rider: Accidental Death Rider acts as a savior to the dependent in case of the unfortunate death of the policy holder due to an accident. In case of such an event happening, the nominee receives the sum assured, ensuring that the dependents are financially protected.

2. Critical Illness Rider: This Rider pays a certain amount of money in the event of diagnosis of a critical illness during the term of the policy. The diagnosed illness must be within the purview of the insurance companys defined categories of critical illnesses.   

3. Waiver of Premium Rider: With this rider, you do not have to pay the insurance premium in case of any unfortunate incident that may cause disability, providing added protection to your family. This extra insurance rider protects your insurance policy from being cancelled in certain situations.
    
4. Family Income Benefit Rider: This particular insurance rider guarantees your family will continue receiving your monthly income when you are not around. When purchasing a policy with this provision, you choose a length of time you would like to provide this security to your family. 

Key features of Riders: 
  • Enhances your insurance policy
  • Can be attached to any kind of insurance cover. However, there are some products like online terms, which come without any riders 
  • Customizes your policy to suit your specific risks 
  • Riders also provide tax breaks under Section 80C and 80D depending on the nature of the rider opted
Although buying a rider means paying an extra premium for this added benefit, this premium amount is much lower as it relatively involves less underwriting. When a claim for the benefits of a rider is made, it can result in the termination of the rider, while the original policy continues to insure you as usual.  

To sum it up, riders come with several advantages such as additional protection, affordability, flexibility and tax advantage. Riders should be taken into consideration while purchasing an insurance policy, as they are a perfect solution to add more to your financial protection considering you choose the right type of riders that would further customise your insurance cover to suit your varying needs. You can position a rider as add on or top to your base policy and make it a complete package. 

Disclaimer:
1. Views as are mentioned in the article are personal views of Author and nothing to link with Co., its Director and Employees.
2. All investments are subject to market risk and you need to consult your financial advisor/consultant before investment. 


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