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.

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What are Life Insurance Riders?

Rider meaning in insurance is get an extra benefit on top of a primary policy, which are brought into play in the case of a specified eventuality. A rider provides financial protection on top of the basic sum assured in an insurance policy. For example, if you have purchased a permanent disability rider and you happen to actually suffer a permanent disability, the insurance provider will give you the specified coverage for the ailment, and yet it will keep your basic life insurance intact, which means that you will still be eligible for your life insurance coverage though you have availed the benefits of the rider.

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.

Benefits of Riders?

Buying a rider is a great way of boosting your coverage in specific situations without having to purchase an altogether new policy with an enhanced sum assured. Let us point out the key benefit of purchasing a rider, as follows:

  • Affordable :

    Purchasing a rider is far more affordable than having to purchase a separate insurance policy. Moreover, there are different kinds of riders that you can choose as per your needs, obviating the need to purchase a comprehensive policy which provides cover for many things which you would not need.
  • Enhanced coverage :

    By purchasing a rider along with your base insurance policy, you can enjoy as comprehensive coverage as you wish. For example, the critical illness rider will pay out a lumpsum amount which you can use to take care of household expenses. They may also be beneficial to pay loan EMIs and other liabilities besides medical expenses.
  • Flexibility :

    These riders make your insurance experience really very flexible. You can purchase a rider with any insurance policy, whether it is a term, endowment, ULIP, or a whole life policy. You can customize your insurance policy as you wish.
  • Tax benefits :

    Just like most life insurance policies, riders also attract tax breaks as per extant tax rules. So, when you avail these tax breaks, it will add to your savings.

Riders in Insurance FAQs:

Yes, you should buy term insurance riders. Ideally, for a coverage which fulfills all your risk-protection needs, you need to supplement your basic insurance policy with specific riders, which will protect you in emergency situations. The chief reasons why you should buy riders are as follows:

  • If you met with an accident and survived, and you have taken an accidental death rider for your term insurance, then you will be entitled to get the rider benefit and also the base sum assured of the policy.
  • If you are debilitated with a serious injury which renders you incapable of performing your professional duties and you thus lose your income, but you have taken the permanent disability rider with your term insurance, you shall be given a percentage of your rider benefit periodically every year for the next 5 to 10 years.
  • If you have purchased a critical illness rider, you can take advantage of it by claiming a lumpsum payment. This rider comes into play when you are diagnosed with a critical illness, such as heart attack, cancer, kidney failure, etc.
  • If you have purchased a rider on your insurance policy, then your family can avail the benefit of it even after you have passed away. They will be assured of a fixed amount of money in the coming years.
If you buy a ‘waiver of premium’ rider, it will waive the premium on your insurance policy. This rider waives future premium payments if the insured is taken in with a critically illness, grievously injured, or disabled. Other conditions may apply, as like meeting given health and age requirements. People who are worried about survival expenses after taking critically ill, should buy this rider so as to stay free of worries.
Any person buying an insurance plan and needs sufficient coverage for specific needs, should purchase riders along with their insurance policies. Also, if you have people in your family who are dependent on your income, then you should buy riders, but ensure that you select the right riders for your needs.
Yes, you can buy riders with any insurance plan, such as endowment plan, or term plan, or a unit-linked plan (ULIP), or even a money-back plan. You should select the riders carefully as they can boost your insurance cover, and go a long way in instilling a sense of financial security in your family.
  • Buying riders:

    Most insurance providers offer the option of purchasing riders only at the time of inception of the policy or on its anniversary. However, this differs from company to company. It is, thus, suggested that you plan strategically before purchasing an insurance policy and the relevant riders.
  • In-built riders:

    Some insurance companies will offer you plans with in-built riders at no extra cost. So, ensure that you check for this feature while doing your research on which policy to purchase.
  • Canceling riders:

    This is a factor that you do not have to be concerned about, as a rider can be canceled at any time during the tenure of the policy.
  • Rider premium payment:

    Ensure that the rider premium payment term and mode are the same as the base policy.

The article is meant to be general and informative in nature and should not be construed as solicitation material. Please read the related product brochures for exclusions, terms and conditions, warranties, etc. carefully before concluding a sale

Consult with your financial advisor before making any decisions on insurance purchase.

*Tax benefits are as per the Income Tax Act, 1961, and are subject to any amendments made thereto from time to time’

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