There are different kinds of riders in a Life Insurance Plan and the common question is “Which rider should I take?” . This is not a question I or anyone else can answer for you. This has to be decided by you and no one else. All you need to know is what exactly a rider is and what it is going to provide you.
What are Riders in Term Insurance?
Riders are the extra benefits that can be purchased and covered for under the life insurance policy. Apart from the basic Life insurance cover, you can choose to add some extra benefits to the life insurance cover, but you will have to pay extra premium to get such add-on benefits. The basic premiums will then increase. Note that the base policy features are always there and you get the base Sum Assured in case of death. Addition of these riders has nothing to do with the original rules of the policy. Let us see all the riders one by one.
1. Accidental Death Rider
In this rider, you get additional sum assured if the death occurs due to an accident. The biggest myth which investors have is that they will get the money if death is due to accident only if this rider is added, else not. This is not true. If you don’t take this rider, still the base Sum assured will be paid to you. This rider is only for the extra sum assured in case of death due to accident at additional cost, nothing else. So if you take a policy of 50 lacs sum assured with accidental rider of 25 lacs. You will get 50 lacs in case of death other than accident and 75 lacs in case of death in accident. A lot of policies cover you from disabilities which arise out of accidents. See Accidental Insurance Policies
2. Permanent & Partial Disability
This rider is helpful in case you are disabled permanently or temporarily due to accident. In that case most of the policies pay periodically for next 5-10 yrs a certain percentage of Sum Assured. For example, 10% of Sum Assured per year for next 10 yrs. This way this rider acts like an income generation insurance most of the times. However note that the rider is helpful only incase the disability happens due to accident only. Read the policy document of the company for exact wordings. Most of the times, this rider is combined with Accident Death rider.
3. Critical Illness
This rider gives you a lump sum amount if you are diagnosed with an illness which is pre-specified and is mentioned in the policy. Generally all the major illnesses are covered in Critical Illness cover. Some of the examples of critical illness mentioned are Heart Attack, Cancer, Stroke, Coronary artery by-pass graft surgery (CABG), Kidney failure and Paralysis for example. After the critical illness is detected, the policy might continue or terminate as per the policy document. At times, the policy coverage reduces by the amount paid to you. So better read the policy document to know exactly what will happen in this rider.
4. Waiver of Premium
This rider makes sure that in case you are not able to pay future premium due to disability or income loss, the future premiums are waived off but your policy is still in force like always. This is in a way insurance of the premium payment till your policy expiry date. In case this rider is not present and you are disabled and not able to pay the premiums, then the policy will expire and you will not get any benefit later when you die because due to non-payment of premium the policy expires and the cover stops.
5. Income Benefit Rider
This rider is present in some policies and it’s mainly for the income generation after the death of the policyholder. If this rider is present, the policy holder’s family will get additional income per year for 5-10 yrs along with regular Sum Assured. For example, 10% of Sum Assured for next 10 yrs will be received by the policy holder’s family.
Riders come with cost and exclusions
Note that riders come with cost, so just because they are present in the policy as add-ons, don’t jump and include every kind of rider possible. Ask yourself why you need a rider and if there is really a need for it. Read about the rider rules in details and read what is not included in that rider. Also compare the cost of riders from different companies to take a better decision.
{ 116 comments… read them below or add one }
Nice article, I’m planning for the term insurance and was in confusion to choose the rider. Thanks….
Good to know Mahesh that this article helped you . Which riders are you choosing and why ?
Actually first three are very important to have, but the premium will go very high. So I think we must have “Accidental Death Rider”, there are very less chances of “critical illness”
as you think ..
Nice article.The term policy with a critical illness rider will surely supplement the regular health policy and give the required security.
Yes .. its important to have a look at the policy docuemnt on what all is covered !
Dear manish i want to know if any online term plan offers income benefit rider
i could not find a one in case of online term plan in which i have the least premium
Prasanna
Actually there is no online term plan which has this rider as of now .
Dear Manish,
today only i have recd a email from religare that iterm is now revised and i can add riders under this policy (3 yr old).
also they have increased by sum assured from 60 lacs to 77.35 lacs automatically without any extra charges for life long, i dont know why?
regards
Mahesh Gaur
Manish….Nice article as always..I have a small question.
If one has a term policy which is renewed half yearly. To be safer side, lets consider the policy in force for 5 years.Now, if the insured person suffers critical illness …say for e.g cancer.The insurance company will continue the policy?How to inform the insurance company regarding the illness? Your advice and suggestions please.
Vassu
Not all company continue the cover after detection of illness . Some company does , some do not , read the documents for the clear message and rules . Like in Kotak , once you are detected with the illness and company pays you a lumpsum amount , then the poliucy continues , but the SUM ASSURED comes down by that much amoutn which they pay
To inform them , you need to show them the doctor and hospital papers and proof
Manish,
I really do not understand the whole point of term insurance which can be bought for say 30 years. So, to get the claim for the nominee, one has to die
in an accident or heart stroke or any other way where insured person dies immediatly without critical illness?
Vassu
The Death can be any form other than suicide for the first year of the term plan
this is the only exclusion given where the company will not settle the claim
is it correct manish
Manish…. I can understand that the death can be in any form other than suicide for the first year. But, what incase someone suffers from a ciritcal illness for e.g paralysis, cancer after 5 years of policy inforcment?. As the policy renewed yearly,half yearly,quaterly or even montly.
Yes true !
Vassu
First point is you dont take a term plan thinking that you will die and eventually nominee will benefit ! .. You buy it just to make sure they are secured in case you die . and the death can be in anyways .. there is no restriction on that , you can die with a critical illness , thats fine ! , you will still get the claim !
I think its always better to buy a seperate accidental full cover from a general insurance rather than taking along with a life insurer , riders have lot of limitations comparative to full cover, Even critical cover, don’t go for a rider but for a separate cover or mix it with ur health insurance . Individual plans cover more critical diseases at a lower cost comparative to the rider coverage.
Thats true .. I support that .. but sometimes if people just need a small extention , they look forward to a rider and in that case , they can choose one .
Dear MAnish,
I took term insurance with Accident and Permanent/Partial disability rider with Bajaj and I took general insurance with Future General as Accident policy..Is it right? or shall i optimise into one??
Its fine as of now .. but make sure you ask your questions, before taking the decision and taking the action. Once you have taken the action , asking about is too much of headache and work for you .
I think waiver of Premium rider is quintessential add-on with term cover. One can take separate cover in place of other riders.
No rider is compulsory , you can take it if you feel you need it
Hi Manish,
Please suggest names of LIC term insurance policies that allow for any of these riders.
Does Jeevan Amulya have any of the options ?
NO LIC term plan has these riders
Good details,
I think Permanent & Partial Disability and Waiver of Premium can boost the basic coverage and I am planning to take the same.
Any suggestions.
Are you asking for suggestion in the plans ? Aviva and kotak offer riders !
Thanks
Not able decide on company….. calculating and searching for company for better claim settlement ratio, simple, easy…
which company you trust ? Are you ok with pvt companies if yes , choose any from Aviva, Kotak or HDFC
Else go for LIC
I think Permanent & Partial Disability & Waiver of Premium should be taken as first priority.
Correct me if I am wrong.
Rakesh
Yea .. that is a good lineup , but it totally depends on person .
Which term plan and medical insurance is best in terms of reliability and without any hidden clauses.
Hitesh
Do you think anything like that will really exist ?
Thanks for the article…So which one do you recommend…. Term + separate health insurance or any better plans ?
I cant decide that on your behalf .. it all depends on how much of benefits you want . if you just want a little bit of advantage term plan rider will give you, but if you want comprehensive cover from accidental issues and critical illness ,a seperate policy is recommended .
Hi Manish,
Any update on online Term Insurance from LIC.
I heard it back in 2011, due to competitive marketing by Private Sectors, LIC
is formulating a new Online Term Insurance for the comman people , with low
Premium.
Link :- http://articles.economictimes.indiatimes.com/2011-09-03/news/30110095_1_lic-policies-lic-plans-jeevan-shree
Subhabrata
Yes .. they are coming and soon it will be there . there was news that its ready and now within weeks it might be there !
I didn’t have clarity of all these aspects in a insurance. thanks indeed for this!
Good to hear that Bhushan !
Manish,
Is there any advantage of taking a separate PA insurance than taking a PA rider on term insurance?
Kannan
Kannan
This article will answer your question : http://www.jagoinvestor.com/2011/12/accidental-insurance-policies-in-india.html
Thanks Manish but that article does not provide the advantage of a separate PA policy over PA rider. I was looking for something like
http://www.business-standard.com/india/news/buying-riders-you-can-be-taken-forride/421896/
(provided by another reader)
Please let me know your thoughts on the same line.
Kannan
The advatage of a seperate policy is that they are more detailed and cover more things . Like an accidental rider in term plan might not give you any income benefit if you are partially disabled, they will not offer your family immediate money for cremation etc .. Hence riders are more cheaper sometimes and also expensive some times (no extra documentation)
Hi Manish,
Thanks for the info. But the only problem with the Riders is that they only come along with Offline Term Plans, I haven’t found any online term plan that comes with a Rider.
Thanks.
Harshit
Pricing is a big issue if riders are included and online term plans try to keep it simple and cheap , so riders are excluded . But some companies like Aegon Religare have introduced riders in their term plan (online)
Manish
Please read the terms of the riders carefully . They can be as absurd as APOLLO MUNICHS Critical illness policy which states that u have to be alive for 30 days after a critical illness is diagnosed . What if you die of heart attack on 2 nd day or during or after a bypass surgery advised by your doctor after the heart attack ?
Amit
Yes .. thats how it is , those are the wording ! and thats how it will be , its your decision if you agree to it or not !
Also be additionally careful while giving health details if taking critical illness rider.
If later the company says that you already had a particular illness but did not declare it – the claim could be in trouble.
Insurance is treated not as an offer from the company but its a proposal from the person to the company requesting himself to be insured. So understand the risk and fill the form truthfully.
As always nice article Manish.
Ashish
Ashish
yes .. you made a relevent point !
My view is to not take any rider in the policy rather it is better to take separate accidental or critical illness cover from general insurance.
Sambit
The final decision is always investors . this article is just for the clarity sake for riders
Not a good idea to mix general and life insurance even for a small extension.
There are several articles online which point out why you shouldn’t mix them. Reasons range from cost to complexity.
One of them:
http://www.business-standard.com/india/news/buying-riders-you-can-be-taken-forride/421896/
Pattu
Yes Pattu .. but if some one is wants to still buy a rider , this article is for those and for knowledge point of view . the decision still lies (and always lies) with the buyer
Manish
Manish,
Which companies are providing these individual riders?
Not all companies give all the riders , some give 1-2 , some give 2-3 .. companies like LIC dont have these riders , but kotak , aviva and others have it
Manish
One problem with such required covers opted as a rider through a life policy instead as standalone(from a general insurer) is that, a basic life cover is required to be opted and to be renewed continuously as agreed initially.
When opted under general insurance, you have an option to switch companies, negotiate premiums, look for better services, enhance the level of covers etc
Yes Satish .. but riders are riders , means they are not the main product . they are add on’s to the main product . So never buy a insurance policy just for the sake of riders !
Manish
Hi Manish,
I am Planning to take ICICI Prudential online term insurance plan (i care). What do u think about this Product. I also put queries on other discussion of this website but i haven’t received any notification yet.
Thanks and Regards,
Shashi
Shashi
What is your question but ? You are planning to take ICARE , are you ok with premium and its terms and conditions ?
which term plan will be better, if I remain maximum time in foreign countries. which company cover death benefits in foreign countries.
Vijay
All companies do , but are you NRI ? Or going to be NRI very soon !
I am not a NRI, but visit abroad frequently. Already having Kotak Term Plan for 15 lakhs, will it work? suggess some term plans for me.
then you can take the term plan , there should be no issue !
hi manish,
I am having Term plan from aegon and i took this online by answering their questions. In future if i start smoking, will i need to update them becausei declared non smoker during plan purchase.
thanks
No , all the future changes are insured and they need not be communicated !
Manish
Manish,
If some one was smoking .
But has stopped smoking lets say 2 months before purchasing the policy.
What shall he declare himself as Smoker/Non-smoker?
Nitin
Once a smoker , always the smoker .. even if you left it 10 yrs back ,you are still in category of smoker .
I have few knowledge of insurance term it is a benefited for investors because they have business and use to money start business and family plans also included the insurance and everyone of useful information.
What does Mr LIC want to say ,sorry i didn’t understand
Hi Manish,
Thanks for an informative article.
I am planning to buy a term plan for 1 cr. I have few queries.I would be glad if you can assist me.
1. Should i take term plan of 1 cr from a single company or break it down to 2-3 companies?
2. Should i opt for online plans or involve any agent/company in the middle? I am interested in riders as well, namely 1,2 and 3 from your write up. My theory for involving any company in between (policybazaar) is that, someone will be there with my family after my death to process the claims.
3. Which are the 5 best companies in terms of claim settlement(%), riders and reputation. An order of the companies would be great.
Thanks
Ravish
Ravish
1. Depends on you . Spliting means spreading it in 2 companies and liberty to stop one of them when you want , but 2 companies means claim from 2 of them and little run around .
2. No , policybazaar is not going to be there for your family , nor will be the agent , there is no compulsion like that on agents or middlemen to service your family or assist them for claim . Its just that some good agents do that as part of their job and its something good . But you should not think like that .. 90% of agents never see their clients after 1 yr (incase of term plans).
3. That you can get from IRDA , but LIC , kotak , HDFC , Aviva etc are on top
Manish
Manish what rider’s does Aviva i-life have?
NO riders under Aviva iLIfe
Are riders very important if you plan to buy a term insurance plan?
But Manish I was searching and came across this article in economic times which says i-life has a rider.
http://articles.economictimes.indiatimes.com/2011-05-16/news/29548472_1_aviva-life-insurance-plan-private-insurer
It might be there at the moment , but in start it was not there .. you can check it on their website
Madhu
That totally depends on you and how you think of riders .
Thanks Manish,
I spent the entire night yesterday to go through this site. And i would like to thank you and your team for this excellent venture.
I have decided to take Kotak. However,I do have some more queries:
I am planning to take pure term insurance from Kotak without riders.Do I have any other option(insurance) for permanent disability and critical illness? If yes, can you please give me a heads up with the companies and plans. If you have any previous posts or thread, it will do.
Thanks
Ravish
Ravish
You can then take seperate accidental plans : http://www.jagoinvestor.com/2011/12/accidental-insurance-policies-in-india.html
Hi Manish, I am newer to this site and very much impressed with the presenation and learning new things. To be frank, I do not have idea of Term Insurance and taken many money back and endowment policies. Now, I am thinking to take one Term insurance policy and I need few clarifications
1. Except suicide, does Term insurance cover other forms of death like natural, death due to illness (though sum assured is reduced), death due to accident?
2. Please help in finding a best term insurance policy. I am looking for 1 crore sum assured and it should cover natural death, death due to critical illness and death due to accident.
3. Is is worth to consider Bharati AXA e-protection plan? for which premium for 1 cr sum assured is lower than others?
4.Medical tests are a must for the term insurance policies
Please help me out in finding the best term insurance.
Ram
1, Yes .. it covers all , also suicide is covered after an year
2. It has to be done by you , not anyone else , you have options with you and you should go with the company you trust .
3. Yes you can consider them
4. Not always .. only if the Sum assured is more than 50 lacs there are medical exams
Manish
Manish,
Thanks man. Will poke you again if i have some more queries
Ravish
Hi Manish,
You are doing excellent work by providing/sharing such information.I am very thankful to you.
I want to know, if i purchase ant online term plan from pvt sector ,
(1) What should be the claim process for online plan? ( If reuires)
(2) Will it be different from coventional( MANUAL) CLAIM process?
I am planning for HDFC Life Click 2 Protect plan for Rs. 1 Cr. I am 28 years old , married.
Thanks in advance… Have a nice day ahead..
Regards,
Hemal Patel
Dear Sir,
I am running 61 and want to purchase 50 lac rupees Term Insurance with
all the riders benefits as well as a Health/Medical plan which can give me and my wife at least 5 lac rupees cover individually. My wife takes Antihypertensive tab.for the last 12 months or so otherwise we both are hale and hearty. Non-smokers,Non-Alcoholic. We do have a coverage,but not sufficient.
Please help by suggesting good insurer
With thanks in anticipation,
Dr N K Sharma
Narendra
There wont be just a single plan for all the things .. you can take a term plan with some riders , but for health insurance you will have to take a seperate plan.
(1) Did I understand right ?? If I have insurance of 25 L and Accidental death rider of 10 L … then in case of death due to accident, my nominee gets 35 L ?? I really was among the ignorant ones who thought that my nominee would get only 10 L in case of my death due to accident and 25 L in case of my death due to other normal / natural reasons.
(2) What about the Critical illness rider ? How does that work ?
(3) Why is it that people do not trust online term plans ? Are they really not trustworthy or is it just a myth ?
Thanks a lot in advance … I really got a lot of invaluable info from this site.
Farazdak
1. Yes , they will get 35 lacs on death from accident and 25 lacs in other case
2. Criticall illness rider gives you a lumpsum money when some critical illness predefined is diogonised.
3. People are trusting it
. Who said not all trust it . Slowly all the people will trust it ..
Manish
Thanks for the reply, Manish …
What I meant in point no. 2 is :- If one has a 25L SA policy and 10L as Critical illness rider, then if one is diagnosed with a critical illness, what amount does he / his dependents receive ? And when the critical illness eventually results in death .. then what ?
Fazardak
You will only get Rs 10 in case the illness is diagonised . if death happens , then you should get 25 lacs more .. Better ask this on our forum : http://jagoinvestor.com/forum
Hi Manish,
Read your book Jago Investor recently. Must say it is an eye opener. Thanks for the wonderful tips and the free book kit which comes along.
One wonderful point made by you was: Never combine insurance with investment. I decided on buying a term insurance (Religare as the premium is lower than others and cover period is maximum – till 75 years) immediately after reading the book. Will invest in SIP too after going through the products available.
Shashank
Shashank
Good to know that you have read the book . Would request you to put your review on flipkart
Start your SIP’s as soon as possible
Manish
Hi Manish,
Yesetrday I met ICICI prudential representative and he said the for a sum assured of 1 Cr, the annual premium would be Rs. 21,700. but for the same 1 Cr sum assured, Bharati Axa e-protect is available for Rs 10K annual premium. Does it have any difference in service (in case of death) with these? He mentioned that claim settlement ration is very less for Bharathi Axa. Can I consider Bharathi Axa e-protect as it has lower premium amount? or is it always better to consider the companies with high settlement ratio despuite higher premiums? Agent told me that ICICI stood after LIC and HDFC (I am not sure if this is correct)
Ram
ICICI is expensive because no medicals are there and the premium factors in that, just go with Bharti , there is no issue !
just wanted to know any online term plan offering disability benifit….or do general insurance companies offer exclusive disability benifit plan
Saurabh
I think online term plan would be difficult ,but you can get it in offline term plan, you will have to do some of the research
Thanks Very much Manish
Hi Manish,
Though online term insurance is cheaper than offline version, i came across the below information:
1) The claim settlement ratio for online insurance is poorer as compared to the offline one. This is due to the re-insurance which companies providing the insurance get done at their end, where they select better companies for offline policies as they are charging higher premium.
2) General belief is that the online insurance is cheaper because of no middle man (agent), hence no commision. If that is the case, the EMI will be cheaper only for the first year whereas it is cheaper for the entire term. Confusing!
Request you to kindly clarify.
Thanks
Shashank
Shashank
1) WHile the point of reinsurance is correct, but I am not sure why it makes online more risky . How did you get that info ?
2. Yes, that confusion is valid, so read this one : http://www.jagoinvestor.com/2011/12/cheap-online-term-insurance-plans.html
Manish,
1) My financial planner provided the info. He also provided the IRDA report in support of this.
2) The article is very informative. Thanks!
Shashank
Shashank
1. then you should trust him and also ask him to educate you on this matter and you later help us know the whole concept
2. Thanks
Hi,
I am currently paying 1 lac premium in LIC’s jeevan tarang since 2007.
I would like to discontinue it & go for 1 cr Aviva i-Life which is approx. 12-13k pa & some other beneficial investment plans, PPF etc.
Kindly advice.
Regards,
Harshal
Harshal
You would loose a good part of your investment till date , you paid around 4 lacs , but you will get not more than 1 lac if you surrender the polichy
Manish
Hi Manish,
Is it better to take term insurance and Permanent & Partial Disability insurance plans separately or Term insurance with the rider?
Pls help.
Regards
bharat
Bharat
Riders are limited in what they offer, so if you are ok with the limited version of riders , then taking it with term plan is fine
Hi Manish
I am 42 years old and i would like to take a term insurance. I may please be suggested with a good insurance plan. since i am a state government class-3 servant, i am not able to invest huge money in insurance. kindly guide me
Insurance is not for investment anyways .. just take a term plan for the protection of your family .
dear manish,
i am planing to buy sbi smart sheild with accidental death rider and total permanent disability rider for 50 lakh as basic sum assured.is there any plan which provide the same riders but at cheaper premium and comparable settlement ratio?
Suvendu
You can check kotak offline term plan
I am 42 years old. Can you suggest me a health insurance plan for 2 elders and 2 children (ages 13, 11).
Koganti
There are several plans in market .. you need to first specify your requirement
I wanted to know what will happen if a company closes its business after few years. What will happen to the policies of policy holder. Will they continue.if so then who will be responsible for claim settlement.
I asked executive of aegon Religare and she said that irda will take care and tenure will continue with all things that company promised whether company exists or not. Is it so?
Yes Vinayak
For long policies you should not worry .. if company closes down, it will be acquired by someone else.
Dear Manish, Information you provide always is good for the reader. Just i would like to know, i have life insurance (not the term) from LIC. If any critical illness, can i claim the life insurance or is it necessary i should have riders to claim the LI, i didnt buy any rider while taking LI and all my LI are in force since last 3 – 8 years. I appreciate your advice. Regards, Mahesh
Mahesh
If you have not taken the rider, then you cant not claim the critical illness.
Hi Manish, thanks for all the info posted on net. just a quick one to know, if person is employed and that if the employer is paying for the critical illness hopsitalization & treatment and at the same time can we claim for the private health insurance also as the person is having private health insurance which is in force since last 4 years; your response shall be appreciated.
Meena
You cant claim the same thing at 2 places , so if you have 2 lacs cover from company and 3 lacs cover as private policy and suppose you spend 1.5 lacs for some hospotalization which both cover, then you can claim it only at one place, not both
hi,
manish ,
please suggest the Term plan and company online/offline which will provide accidental Disability rider.
for 25 yrs 25 lacs SA Age 37
Vinod