Riders in
Insurance

A rider in insurance parlance is an additional benefit added on to an insurance policy which requires the payment of an additional premium. By purchasing various riders, you can customize your insurance policy to best suit your needs. Riders can expand the scope of your insurance policy at the payment of an extra premium, which is more cost-effective than increasing the sum covered of your insurance policy.

For instance, if you suffer a permanent disability or are taken down by a critical illness, it could leave you jobless and without a source of income. If you have just a simple life insurance cover, it will not protect you against a loss of income which is caused by a critical illness or a permanent disability. In such a situation it would become really difficult for you to manage household expenses and make both ends meet.

And with people getting critical illnesses like a heart attack even in their middle ages, they may be forced out of work at a ripe young age, after which they only become a burden on others. The treatments of such things, moreover, are skyrocketing, and without riders it could land you in heavy debt traps. To avoid such a dire eventualities, it is critical for you to purchase suitable riders to make your insurance policy more comprehensive and able to cover any unforeseen mishaps.

What are Different Life Insurance Riders?

There are different types of riders in life insurance offered by different insurance companies, and even the same rider may vary in features among different companies. However, fundamentally the chief aim of a rider is consistent across the spectrum, and they can be safely generalized as follows:

• Accidental Permanent Disability Rider :

  Due to an accident, if the policy holder suffers a total and permanent disability, that is if they lose their legs and arms, or any other permanent disability which renders them incapable of working for a living, this rider will aid with the cash inflow. The amount of the rider benefit will depend on the terms and conditions and the sum assured of the policy. Most companies, however, pay a percentage of the benefits accrued due to the rider every month for a specified number of years. If the policy holder, however, passes away during the tenure of the policy after having suffered from the permanent disability, the outstanding sum assured and the remainder of the rider benefit is paid to the nominee of the policyholder. For those people who commute to work daily by public transport or private vehicles, it would be advisable for them to buy this rider.

• Accidental Death Benefit Rider :

  This rider comes into play when the policy holder dies in an accident. Then the insurance company shall pay the sum assured along with the rider grant to the nominee of the policy holder. Sometimes, though, the policy holder who suffers an accident may not die immediately but after the elapse of some time, and for this reason insurance companies set a time limit till when the rider benefit will be eligible to be paid to the nominee, such as maybe 90 days. For instance, say the policy holder dies 74 days after suffering an accident, the insurance company will still pay the nominee the benefit of the rider plus the policy’s sum assured. One would be advised to check the terms and conditions carefully while buying the policy with this rider.

• Critical Illness Rider :

  This rider provides cover for illnesses like heart attack, stroke, kidney failure, cancer, paralysis, etc. It is vital to check out the entire list of critical illnesses covered in the policy you wish to purchase as it varies from company to company. The insurance provider pays this rider benefit after the critical illness is detected. A critical illness may not immediately lead to death, and the crucial thing is that the sufferer will lose their source of income. However, when you have this rider, it compensates for the loss of income immediately, allowing you to use the money for medical treatment as well as for monthly expenses. There are some insurance providers who pay hundred percent of the sum assured upon diagnosis of the critical illness, but only if the insured survives a waiting period of 30 days after the illness has been diagnosed. This rider is a necessity for people who work under tremendous stress, those to smoke and drink too much, or those who lead an erratic lifestyle.

• Waiver of Premium :

  There are certain circumstances when the insured suffers a disability and is reduced to a condition where they are unable to pay future premiums on their policy. Normally in such a situation the policy would terminate, but if the insured had taken a waiver of premium rider then the future premiums will be waived and the policy will continue to be in force. Such a kind of situation may also arise if the proposer is different from the insured. If future premiums amounts cannot be paid owing to the accidental disability or death of the proposer, then in such a situation the premium for the base policy and its riders will be exempted, but the policy will remain in force. This waiver of premium rider is generally available along with the accidental and permanent disability or the critical illness rider, but if it is not, then it will have to be purchased separately incase you wish to take the benefits of the rider.

• Accelerated Death Benefit Rider :

  This rider is beneficial in cases where the insured is diagnosed as having a terminal illness like cancer, leukemia, Ebola, AIDS, etc. These illnesses drastically cut down life expectancy and it is in such situations that this accelerated death benefit rider comes in handy. In such circumstance, the insurance provider pays a portion of the sum assured in advance, which can be made use of for treatment of the disease by the insured. The remainder is paid to the nominee after the insured passes away. For those people who work in dire conditions where the danger or contracting a terminal disease is ever-present, such as those working in mines or asbestos factories, purchasing this rider are a must.

• Term Rider :

  This rider provides a lumpsum amount or a monthly income to the nominee if the insured were to die. The benefit of this rider may be equal to the base policy coverage or may be a pre-fixed amount as defined in the policy. This rider is beneficial for someone who wants to leave behind a huge amount of money as a legacy.

• Hospital Cash Rider :

  If you purchase this rider, you will be paid a fixed amount per day of hospitalization. This amount varies from each company to company, and it would be wise to have it fixed at the very outset, that is at the time of purchasing the policy. This rider is beneficial for anyone who wishes to avail the facility of day to day expenses due to hospitalization.

• Surgical Care Rider :

  This rider has you covered if you have to undergo an inevitable surgery, but in India, and in such a situation a lump sum amount will be paid to meet the expenses of the surgery. This benefit will, it goes without saying, differ from surgery to surgery, and the amount paid for a minor surgery will obviously be lesser that the sum paid for a major surgery.