Term life insurance plan is the cheapest and pure life insurance product. You should assess your financial needs and risk factors before buying an insurance policy. The term policy should cover your risks efficiently. If the basic premium paid towards the policy is not sufficient to cover various kinds of risks, you can go for add-ons. Add-ons are also called as riders with which you can enhance the risk coverage. With the inclusion of riders, the overall benefit will increase and you will not want to buy a second term policy.
The following three riders will improve the effectiveness of your insurance plan:
- Critical illness
- Accidental disability
- Waiver of premium
Critical illness add-on – A term plan with a critical illness rider will offer higher protection and the financial benefit will be more than the regular term policy. People of all age groups are suffering from various kinds of diseases and sicknesses. Various factors attribute to the rise in health issues.
The change in food habits, living conditions, hobbies, occupation-related issues and pollution are some factors which attribute to various kinds of diseases. Cancer, cardiac issues and organ failure will have a catastrophic impact on the life and sustenance of the individual. The loss of income will lead to many financial issues. The family members or dependents can be protected by including the ‘critical illness rider’ in the insurance plan.
If the policyholder is diagnosed with critical illness as defined by the insurance regulator (IRDAI) or as provided by the life insurance company’s contract, there will be lump sum compensation. Expensive medical treatment can be borne with the help of the additional rider. The rider will not include the pre-existing health conditions of the policyholder.
Accidental disability add-on – It is not possible to avoid accidents. You cannot prevent them altogether. Hence, you should prepare for the undesirable event by choosing the accidental disability cover.
The accidental disability rider offers protection against the accident. The policyholder will get lump sum amount to get medical treatment and the family will be able to meet the financial needs without fail.
By paying few hundreds of additional rupees, you can make a claim worth of few lakh rupees.
Waiver of premium add-on
The life insurance contract is based on the consent of the insured and the insurer. The insured will pay the premium as per the benefit offered by the insurer. The insured will cover the risk by paying the premium. If the risk takes place, the insurance company will fulfill the obligation by paying the compensation.
However, there will be occasions where the insured fail to pay the premium. If the insured loses his job or livelihood, he/she fails to contribute the premium. The disease, sickness and accident will change the smooth sailing life and there will be difficulty in paying the insurance premium.
To bail out from the difficulty in paying the premium, the insurance company offers a waiver of the premium add-on. By paying an additional premium of few hundred rupees, you will ensure that the policy will not lapse in spite of the non-payment of the premium before the deadline.
In some term insurance plans, the waiver add-on will be included by default. If it is not included with the basic premium, you should opt for the add-on by paying few hundred rupees on annual basis.
Life stage benefit
To increase the coverage limit, you can also choose life stage benefit. Young people can opt for life stage benefit if they earn more. The ‘life stage benefit’ will help the policyholder to get additional benefit. The option can be exercised if there is a rise in liabilities as well.
The term rider will help the beneficiary to get additional amount over and above the cover offered by the insurance plan. You can choose a specific term in which the term rider will be applicable. In most of the cases, the amount will be equal to the ‘sum assured’.
There are hereditary risk factors and job-related risk factors which can be covered by choosing the additional riders. Instead of buying a new policy, you can add these riders conveniently.
If you want to buy two or more policies, you will incur higher premium contribution. The riders are smart enough to fulfill your risk coverage needs. Hence, you should assess your risk factors and additional riders can be subscribed.
Accident, critical illness and waiver are important add-ons with which the policy power can be multiplied tremendously. The pure term plan will help you pay a very low premium and there will not be additional burden by choosing the riders. You can also include additional riders as per your needs. After comparing the riders, the premium, term, and benefits, you can choose the best plan that fits your budget, convenience and risk profile.