Types of Riders in Term Life Insurance

Riders or Additional Benefits

Additional benefits over and above the default cover of the policy are called riders. You pay an additional amount over your premium for the riders. Your term life insurance policy cover can be customised for your needs by choosing appropriate riders. Let’s look at the available riders and choose amongst them.

1. Accidental Death Benefit

This rider pays nominees an additional amount over the sum assured in accidental death. Generally, this additional amount is a percentage of the sum assured. This amount can cover the medical and legal formalities in accidental death. You can opt for this rider if you are in a hazardous occupation or travel a lot.

2. Accidental Disability Benefit

This rider aims to cover the loss of income due to an accident rendering you disabled. In this case, you will be paid a sum every year for 5 to 10 years. This sum is usually a percentage of your sum assured, and it is often clubbed with an accidental death benefit.

3. Accelerated Death Benefit

This is designed to cover the high cost of treatment of terminal illnesses. The nominees get a part of the sum assured in advance. Opt for it if you have a family history of terminal illnesses.

4. Critical Illness Benefit

Illnesses like cancer, paralysis, heart disease etc., are called critical illnesses. Treatment and recovery are often unpredictable in these illnesses, and the treatment also tends to be expensive. 

With this rider, you can get a fixed lump sum amount upon diagnosis of a critical illness. The policy may lapse or continue based on the policy terms. For some policies, the amount paid out may be deducted from the sum assured. Check the policy document carefully if opting for this rider. You may choose this rider if you have a family history of any of these illnesses.

5. Waiver of Premium

This rider covers your future premiums in case of loss of income. In the future, you may suffer from loss of income, which might render you unable to pay future premiums. In this case, the rider provides a waiver on future premium payments. You may opt for this rider if your income is wavering or unpredictable.

6. Income Benefit

This rider is designed to pay your nominees an annual income for 5 to 10 years. The payment kicks in after your death. This annual income is over and above the regular sum assured. It would help if you opted for this rider to cover children’s education after your premature death. This can be a sound idea if your children are younger.

Choose the Riders Most Appropriate for your Situation

Riders are designed to enhance your term life insurance cover. They are like the icing on the cake. As seen above, you do not have to go for all the riders. However, not choosing any riders may not be a good idea too. Pick the riders most appropriate for your situation.

Understand your family’s needs. Ask yourself questions like: Am I prone to critical illnesses? Am I prone to accidents? Is my income wavering or unpredictable? Are my children very young? 

Follow the selection criteria above to make an informed decision about the right mix of riders.

Read more about Seven Factors Influencing your Term Life Insurance