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Term Insurance 405 views January 16, 2019
Best Term Insurance Riders of 2020
In the age of uncertainty, having a mere term insurance cover to financially secure your family does not seem enough. Increased expenses, rising debt and the rush to meet ends meet have resulted in people looking for ways to invest in financial instruments that secure the future of their loved ones in their absence. While a term insurance plan with an adequate amount of sum assured helps, factors like sudden death due to accident, inability to pay premiums due to disease or disability, financial incompetence of dependents, etc. cannot be ignored.
To counter the impact of conditions that are mostly sudden and unforeseen, many life insurance companies in India avail their customers added benefits also called term insurance riders. These may include:-
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Deaths due to accidents have gone up drastically in the past few years. Sudden death due to accident adds to the feeling of instability synonymous with the death of the breadwinner. As essential financial security against accidental deaths, some insurance companies offer an amount over and above the predetermined amount of sum assured to the nominee(s) of the policyholders. This rider comes into force only in the event of death due to accident and must be bought by customers working in traveling jobs or employed in dangerous conditions.
Sudden disabilities, be it partial or permanent, due to accident or disorder can result in loss of livelihood. Whether the policyholders continue to survive by being disabled or succumb to the disease or accident, this cover ensures a regular income each month to substitute for the loss of income due to death or disability of the breadwinner of the family. The effect of this cover comes into force on the policyholder getting disabled during the accident.
While total disability ensures the complete amount of sum assured to the nominee(s), the insurance company disburses only a part of the sum assured on the partial disability of the policyholder. In most instances, the insurance companies compensate for the loss by giving the death benefits in monthly installments.
Major health problems like heart attacks, kidney failures, cancer, paralytic attacks are becoming increasingly pervasive these days. The inability to pay for treatment of these diseases adds to the patients’ vulnerability. Some term insurance plans contain the option of critical illness rider, thus, mandating the insurance companies to pay for the treatment by disbursing a percentage of the amount of sum assured, in lump sum, on diagnosis of the health disorder for treatment purposes.
However, not all life insurance companies in India sell term insurance policies containing this rider. It is important that customers read the policy documents carefully to know what illnesses are covered in the rider. These plans must not be confused with health insurance plans as they cover the costs of treatment of critical illnesses only. The premiums do not increase and continue to remain the same throughout the entire policy period.
The benefits of term insurance can be availed only if premiums are paid regularly. Sudden disability from accident or disease may prevent the policyholder from paying the premiums for the entire policy period. With this rider in place, the insurance company waives off the need to pay the remaining premiums in case of disability during the policy period. This benefits the policyholders as their nominees continue to be eligible to receive the death benefits in the event of sudden death. Policyholders living a risky lifestyle or vulnerable to serious health problems must consider opting for this rider by paying additional premium charges.
One of the biggest disadvantages of leaving behind the lump-sum death benefits is that the concerned recipients of the money may not have the necessary financial acumen to handle it. Also, the death of the breadwinner of the family results in the dependents losing out on their regular monthly income. Paying additional premiums for this rider implies that the nominees get only a part of the amount of sum assured on the policyholder’s death. The rest of the amount is disbursed as regular monthly income for the next five to 10 years depending on the terms and conditions given in the policy proposal.
Despite the government’s consistent efforts to put a cap on medical pricing, hospitalization expenses and costs of treatment are rising every year. Detection of terminal illness and consequent hospitalization can make it difficult for existing policyholders to pay their premiums on time. Having this rider in place ensures that the insurance company pays, to the policyholder, a part of the sum assured on being diagnosed with critical disorders. The rest of the amount is handed over to the nominee(s) in the event of the policyholder’s death.
Not all riders may serve your purpose, hence it is necessary to opt for those riders only that fit in your needs. Also, riders come at nominal additions to premium charges of level term insurance plans. Before choosing any rider, customers must read the details published in fine print in the policy. Also, different insurance companies charge for riders differently. This means that you must look at the premium charges of different term policies, compare the corresponding benefits that they promise and pay for the one that is in sync with their needs and budget.
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