Life Insurance Riders

From designing the interiors of your house to picking the colour of your car to the toppings on your pizza - you want things to be customised to your preferences and likes.

In a similar vein, a life insurance policy is also a personal purchase that spans many years - which is why it should meet your requirements. To get the most out of your policy, you should select the right features and tailor it to meet your and your family’s needs.

One way you can do so is by adding riders to your base plan. What are riders? What are the types of riders available with the life insurance plans? Let's find out!
 

What Are Riders?

Riders are optional add-ons that can be added to your base life cover at a certain extra cost. They enhance the scope of your base coverage.
 

Benefits Of Riders

• Broaden Your Coverage

  Riders financially protect you against a variety of risks. If the specified incident happens, the insurer pays the rider sum assured to you.

• Save You Time

  Riders eliminate the need to deal with more than one insurance policy, thus saving time.

• Easy To Add

  You don't need to submit any additional paperwork or undergo medical tests with the insurance company beyond the ones you've already done at the time of buying the life insurance plan. In this way, you can choose more benefits without having to do any additional work.
   

Riders Available With Life Insurance Plans

1. Hospital Care Rider

   The Hospital Care Rider pays a fixed amount of cash for each day you are hospitalised if your treatment is medically necessary. You are required to be admitted to the hospital for a minimum period of 48 hours. The daily cash benefit amount can be adjusted to meet your individual needs and the premiums will vary based on the daily cash benefit amount you choose.

   This rider comes with two basic conditions -

   • The rider is only available to those who are 18 or older.

   • The rider's policy period should not exceed that of your life insurance policy.

   Example: Pratik has a hospital care rider along with his term insurance plan. He is diagnosed with heart disease and his treatment necessitates hospitalisation for a period of 5 days. Pratik will be paid Rs 4,000 for every day he is hospitalised under the hospital care rider. Hence, Pratik will receive a total sum of Rs. 20,000 over the course of 5 days.

2. Critical Illness Rider

   The diagnosis of a serious illness, such as heart disease, cancer, etc., can be a distressing experience for you and your family. It might even result in less or no income, which will make the situation even more difficult. Additionally, you may also incur several expenses associated with medical treatments, medicine, follow-up visits, and check-ups.

   A Critical Illness Rider can help you and your family avoid financial hardship if you are diagnosed with a critical illness listed in the policy document. It will give you a fixed amount of money as stated in your policy while your policy is in effect.

   This rider is generally of two types -

   • Accelerated Critical Illness Rider

     This rider will pay you an advance amount out of your total base cover. If you use the rider for a certain amount, your base policy cover will be reduced by that amount.

   • Comprehensive Critical Illness Rider

     This rider does not lower the base policy cover amount, as opposed to the accelerated rider. Here, the sum assured is independent of the cover amount.

   Example: Raj has a whole life insurance policy with a sum assured of Rs. 1 Crore and he buys a Critical Illness Rider with a cover of Rs. 20 lakhs along with it.

   If Raj buys an accelerated rider	If Raj buys a comprehensive rider
   If he gets seriously ill with a listed critical disease, the insurer will pay Rs. 20 lakhs and his whole life insurance cover will be reduced by this amount to Rs. 80 lakhs.	The insurer will pay Rs. 20 lakhs when he is diagnosed with a listed critical illness. The rider will not affect his whole life insurance cover - it will remain the same, i.e., Rs. 1 Crore.

3. Surgical Care Rider

   The Surgical Care Rider offers a fixed sum of money in case you are hospitalised for a minimum period of 24 hours for surgery that is medically necessary and actually undergo the said surgery.

   With this rider, you can select a benefit amount, and the rider sum assured is 50 times your selected benefit amount. You can use the benefit amount 50 times over the course of your life insurance policy and 10 times in a policy year.

   Insurers will pay the benefit depending on whether the surgery falls under the 'major surgery' or 'other surgery' category in the policy document.

   • In the case of major surgeries, like valve-replacement surgery, the lump sum payment will be five times the benefit amount.

   • In the case of other surgeries, you will receive the benefit amount you choose.

   This rider comes with certain conditions -

   • The rider is only available to those who are 18 or older.

   • The ride's policy period should not exceed that of your life insurance policy.

   Example: Derek buys a Surgical Care Rider along with his endowment plan. He chooses a benefit amount of Rs. 25,000.

   Thus, the rider sum assured = 50 x 25,000

   = Rs. 12.5 Lakhs

   Within a few years of buying the policy, he undergoes a kidney transplant (a major operation). The lump sum he will receive will be 5 times the benefit amount (5 x 25,000), i.e Rs. 1.25 lakhs, since he is undergoing major surgery.

4. Accidental Disability Rider

   An accidental disability could impact your ability to earn and live a regular life. You may not be able to support your family and yourself in that situation. You may also incur additional expenses for medical devices and home modifications to make life safer and easier.

   An Accidental Disability Rider offers financial protection against such situations. In case you get permanently disabled because of an accident, you will receive an additional sum of money to take care of your daily expenses, medical costs, and have a safety net.

   Important note:

   • This rider pays out only in case of permanent and total disabilities..

   • The amount you receive will depend on the type and nature of your disability.

   Example: Rohan buys an Accidental Disability Rider with a cover of Rs 5 lakhs along with his term insurance plan. He meets with an accident a few months after buying the policy that leaves him permanently disabled. Therefore, Rohan will receive a rider benefit of Rs. 5 lakhs from his insurance company.

5. Accidental Death Benefit Rider

   The rider pays an additional sum to your family in case you pass away unexpectedly in an accident during the policy period.

   Please note that the rider benefit will only be paid if the death happens within 180 days of the accident.

   Example: Manav purchases a guaranteed income plan with a cover of Rs 50 lakhs along with an Accidental Death Benefit rider with a cover of Rs 10 lakhs. He passes away due to an accident during the policy term. As a result, his family is now entitled to receive both benefits, amounting to Rs 60 lakhs.

6. Waiver Of Premium Rider

   This rider is of two types:

   • Waiver Of Premium Due To Critical Illness Rider

     This will waive all your pending premiums if you are diagnosed with one of the listed critical illnesses. So, all future premiums of your life insurance plan as well as associated riders will be waived till the end of the policy period.

   • Waiver Of Premium Due To Disability Rider

     This rider works in a similar fashion. It will waive all your pending premiums if you suffer accidental injuries that result in a disability. Thus, you can enjoy the benefits of the policy without the burden of any future premiums.

   Example: For instance, Lalit buys an Endowment Plan for 15 years where the yearly premium is Rs. 50,000. In addition, he purchases a Waiver Of Premium Due To Disability Rider with a cover of Rs. 30 lakhs. In the 10th policy year, he meets with a major accident and loses both his legs. As he is permanently disabled, his insurance company will waive his premiums for the remaining five years. And, his policy will remain in force until the end of the term with all the benefits intact.

   Please note: There may be more types of riders available, depending on the insurance plan and company you’re buying from.
    

Wrapping up!

Riders help you customise your policy in accordance with your specific needs and wants. Adding them to your base policy is a smart way to make sure you are extra protected against unfortunate circumstances, without burning a hole in your pocket.