Buying a term insurance policy is an excellent way to get ample protection against life’s uncertainties and safeguard your family’s financial future. Although these plans come with several benefits, there is scope to get more out of your term policy.
You can supplement your term insurance by purchasing riders or add-ons. These additional coverage options are not part of the basic policy, but you can add them to your plan by paying an additional premium. You can purchase one or multiple riders based on your specific requirements.
Let us know more about what riders are? And why you must consider adding riders to your term plan.
What are term insurance add-ons or riders?
Riders or add-ons are extra coverage options you can purchase by paying an additional premium to extend your term plan’s cover and get additional protection. These riders provide protection against the risks that are not covered under your base plan.
Why should you purchase term insurance riders?
- Additional protection option
The riders are like a seatbelt in your car. Although the car has a solid build and keeps you protected, the seat belt enhances the protection, and it comes in handy during an accident. Similarly, the term life insurance riders enhance the protection scope of your term plan.
Depending on the type of add-on you have purchased, in the event of an unfortunate event like a road accident or critical illness, the rider will help you get additional financial support. You can use this amount for hospital expenses.
- Additional benefits for covering specific risks
A regular term plan provides coverage only against natural death. However, what happens if you are diagnosed with a terminal illness or if you meet with an accident that causes permanent disability. In such a situation, you will not get any payout from your regular term plan.
But if you have purchased an accidental cover or a critical illness rider, the insurer will pay a lump sum amount upon diagnosis of the illness. Thus, riders offer better protection.
- Easy to manage
While the riders work in tandem with your basic term plan, it is advisable to purchase the riders you want at the initial stage when buying the policy. This will help you avoid the hassles of keeping track of the policy periods and different premium payment dates. Instead, you can pay a single consolidated premium. Thus, riders work like an additional policy but are much more cost-effective.
- Special benefits
Today, insurance companies offer a variety of add-ons to suit the varying needs of the people. Some special riders like child education support or daily income support provide financial support to your child’s education needs or compensate for the loss of income due to hospitalisation.
- Additional Tax benefits
Apart from the tax benefits available on the term plan, you can get an additional deduction on your riders. For example, if you have purchased a critical illness rider, you can get additional tax benefits up to Rs. 25,000 over and above the tax benefit guaranteed on the premium paid under Section 80C of the Indian Income Tax Act.
Final Word
Thus, riders give you additional protection, tax benefits and financial support.
