Jagoinvestor

February 23, 2012

Meaning of different Term Insurance Riders !

There are different kinds of insurance riders and the common question is “Which insurance riders 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.

Term Insurance Riders

What are different kind of Insurance Riders ?

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 insurance 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.

These Insurance 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 insurance riders from different companies to take a better decision.

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Santosh
Santosh
8 years ago

Dear Manish,

I am looking for term insurance with 40 years Policy period and permanent and partially disability rider for NRI. Kindly need your advice. Thanks.

Promod
Promod
8 years ago

Dear Manish,
I’m a avid reader of your blogs. Recently, an agent put in a doubt regarding my HDFC Click2Protect (not the plus) saying it did not cover Accidental Death Benefit. I have been having their policy for few years now! On enquiring, they assured that is it there and covers all kinds of deaths except self-inflicted. However, they also said to go in for the Click2Protect Plus plan?? I wonder why did they insist on the Plus plan?

Does your statement “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.” answer my question? 🙂

In the comment above on 14thDec, for “all riders has been discontinued from term plans.Is it true ??” you mentioned “yes”? But I see the Plus plan is all with riders etc?

Also, what do you advice? Is it good to club these Accidental Death, critical illness riders with a pure term Life insurance or to take then separately?

Awaiting a reply. I’m sure

DEEPAK MOHANAN
DEEPAK MOHANAN
9 years ago

I wanted to buy a term pln with riders of partial/ permanent disability and critical illness…
Is that possible..??
pls opine…

alok
alok
9 years ago

Hi Manish,

Could you please confirm which company is providing Term Plan with Partial/Permanent Disability Raider. Also Confirm the Annual Premium.

Thanks

amit
amit
10 years ago

dear sir,
a agent with aviva told me that from December 13 ,all riders has been discontinued from term plans.Is it true ?? i want a term plan with accidental & critical illness riders to go along the term plan. Any suggestions???

amit
amit
Reply to  Jagoinvestor
10 years ago

manish jee
thanks . now plz advice me abt the plan also.

suresh panara
suresh panara
10 years ago

Hi Manish,

Recently I opt for Term Insurance. My question is, after buying Term Insurance now can I opt for any riders? or it has to be bought while applying for Term Insurance only?

Thanks
Suresh Panara

Sachin Gupta
Sachin Gupta
10 years ago

Thanks a lot Manish. Bought it a couple of days back. 70 lacs SA and a premium of 8920 agaist that for a term of 30 years.
Thanks for your consultation.
Happy New Year!!! 🙂 God Bless. Please keep up the good work.

Sachin Gupta
Sachin Gupta
10 years ago

Hi Manish,

Wonderful article. I must admit that I was surprised to see that the article is still alive and people have been commenting for past one year.
Wanted to check with you for the list of term insurance plans with disability rider.

Thanks,
Sachin

Sachin Gupta
Sachin Gupta
Reply to  Jagoinvestor
10 years ago

Nice to see your response Manish.
I was thinking of buying the SBI Life eShield term insurance plan that was launched in September 2013. Not very sure if I should be going ahead with his. Scared since the plan aint too old so no reviews that we can get from people.
All that’s attractive about this plan is the “SBI” banner that claims to have one of the highest overall settlement ratio.
SBI also has an offline counterpart. Only thing that the premium is truning out to be INR 3,500 costlier for me. Confused- whether I should opt for online eShield plan or not.

Kesava
Kesava
11 years ago

HI Manish,
I have read riders options of a particular insurance company.
i just want to know about Accidental death and disability rider benifit.
My doubt is:
1) if accident happens while riding a bike , is it applicable ?
is there any condition like , its applicable only when travelling in a Public Transport like train ,bus or fair car etc .. ? is it changes as per company rules ?

2)If accident happens while walking on road ? will it applicable ?

Please clarify my doubt..

Sharath
Sharath
11 years ago

Hi Manish,

Would you recommend having a CI rider or taking a stand alone CI policy.
In either case could you please share your reasoning?

Dushyant
Dushyant
11 years ago

Hi,

I want to buy Term insurance plan for 25 -30 lac + critical illness rider

which company/plan will you suggest?

Thanks,
Dushyany

Anurag
Anurag
11 years ago

Dear Manish,

My brother works in a chemical tanker and wants a term plan with disability rider. Which companies have such plans covering seafarers and what is the name of the plan?

Thanks

Anshuman
Anshuman
11 years ago

Dear Mr. Manish,

Can you suggest a Term Insurance plan having facility of all Riders like :
Accidental Death, Critical Illness, Accidental (permanent & partial) Disability, Waiver of Premium, Income Benefit ?
Also it should have a reputation of high customer satisfaction, so that i can blindly chose it.

Thanx

Tejas
Tejas
11 years ago

any suggestions or review on the new term policy luanch by TATA AIA called as Mahasuraksha supreme..looks good…i am looking for 1 cr. term plan

viswa
viswa
11 years ago

Hi
I have few quires, Can I get your opinion / clarifications:

I have two endowment policies (postal) for SA 5 lacs each – where I am paying Rs. 30, 000/-annualy for lat 6 years. One LIC jeevan anandh for SA 10 Lacs – paying Rs.30,000/- annualy for lat 4 years. I am considering the following two plans:

PLAN-I:
Discontinue all the above policies and to take term policy for Rs. 60 lacs each from two reputed companies. For this i may have to pay around Rs. 25,000. The rest of the money i.e. around 35,000/- to invest through SIP in 2/3 mutual fund companies. My age is 31 with net salary of 45K.

PLAN-II:

Continue all the existing policies and take just one term policy for around 60lacs.

Which of the above would be the best for me. For me it seems PLAN-I should be the best of the above two. But I am confused and not able to take any decision for last 6 months. Can you please give your valuable opinion, regarding which of the above two plans is best from me as on today. Or do you have any other best alternative suggestions for me.

Waiting for quick and in-detailed reply. Thanks in advance.

viswa

Joe D'Cruz
Joe D'Cruz
11 years ago

Thanks Manish.

Joe D'Cruz
Joe D'Cruz
11 years ago

Manish,
Thank you for such an informative article. Your patience is admirable, in spite of the fact that many of the questions asked are already answered in the article itself, you still answer them. I am an NRI Civil Engineer based in KSA and I have 2 questions:
1. Being an NRI can I take a Term Insurance in India? Or do they have separate insurance policies targeting our segment?
2. How will I undergo medical examination if I opt for more than 50Lakh cover? I visit India only once in 2 years.
Thanks in advance.

Vandhana Karthick
Vandhana Karthick
11 years ago

My mother has been covered in Critical Illness rider policy in ING Vysya Life Insurance and the sum assured is Rs.70000 and the sum assured is very low and being opened by my brother when he is working, without my knowledge.I am paying every year Rs.8000+tax it is for 16years time period and I have paid for 4years, they told that every 4years 20% bonus will be given and 3rd 4th year 40% bonus will be given.I have one doubt which no illness happens for all 16years and I have not claimed at all shall they will pay full sum assured at the end of 16years with all bonuses or by deducting bonus amount? I have missed to ask the ING vysya person, now when I studied this I feel that timely article I read..

Padma
Padma
11 years ago

Hi Manish,

Your blog have very useful information. I have a question on term insurance. I have 1cr. online term insurance with out any riders. Now my spouce is taking a plan. We wanted to take a term plan as well we wanted AI, DR and WP. My plan is to take only WP with Term insurance and criticall illness and permanent/temp disability as a separate but not sure the options to take separately. Pls advise whether good have riders cover separately rather as term insurance rider if so what are they ? Pls advise.

Thank you
Padma

vijay kumar
vijay kumar
11 years ago

I am basically an LIC agent.
I cheated many people by asking them ( some times forcing them) to take Money-back policies. I am stupid to do all these stuff. I realized by reading you blog since last 2weeks. ( Please do not disclose my actual email or name to anyone).
Now onwards i will suggest only term plans. For investments i do not recommend LIC policies. I am very much happy now after taking this decission