What is a Rider in Insurance? Its Types & Advantages

Life Insurance Riders: Definition, Advantages and More

Life is unpredictable and hits you at the most unexpected times. Though we are always prepared with insurance covers for ourselves and our loved ones, it is not enough. You always need something more to safeguard everything dear in your life. In the case of life insurance, it is an insurance rider.

What is a rider in insurance?

Riders are optional, extra terms that go into effect along with your basic policy, often at an additional cost. Simply put, a rider provides additional coverage and added protection against risks. Insurance riders are effective add-ons you can choose in addition to your life insurance policy at economical rates. They make your policies robust and broad, covering more than just the cost of your demise.

Types of Riders:

• 1. Accelerated death benefit rider:

  This is an added feature that comes as an extra rider and allows a policyholder or his nominee to have additional benefits. Apart from the base plan benefits, it allows extra coverage to in the event of the policyholder’s death due to any specific and pre-defined condition.

• 2. Accidental Death benefit:

  This rider comes with a clause of a lump-sum payment of the sum assured to the nominee in case of the policyholder’s death due to an accident/mishap.

• 3. Critical illness rider Accidental disability rider:

  In the event of any kind of disability, this rider provides financial protection. The Accidental disability rider must be chosen as per the actual requirement and not randomly.

• 4. Critical illness rider:

  This is an additional rider that provides additional coverage in lieu of the extra premium terms and accompanying payment choices. This term rider offers comprehensive financial coverage against the possibility of any critical illness. This rider provides coverage against critical illnesses that are defined and listed in the policy documents of respective insurers.

• 5. Income rider:

  This is the rider that allows the policyholder’s nominee to get a specific amount of sum as a fixed income in the event of the policyholder’s death during the duration of the plan.

• 6. Waiver of premium:

  This is the most sought-after rider, often added to other policies, especially a child plan. In this rider, there will be no payable premiums if the policyholder’s dies and her/his nominee will be eligible for the base plan benefits.

How can we buy riders?

The riders are sold at the same time you buy an insurance policy. For example, when you buy a policy from an insurer, you can also choose the riders from the list. Keep in mind that these riders should be bought at the time of purchasing the base insurance plan. The riders cannot be added after the base policy is bought. It is worth taking time to evaluate whether or not investing in an additional rider is beneficial for you. While some insurance companies have in-built riders in the basic life insurance policies, others have flexible plans, which can be customized according to your demands.

Advantages:

• They offer extra coverage which can be helpful in times of financial crises
• Buying a rider is much more economical than buying a separate insurance policy
• It makes the insurance policy more economical
• It allows you to customize your insurance policy

How are Riders linked with the plans you buy?

Put simply, riders are add-ons or additional benefits that you purchase along with the life insurance policy. They go into effect along with your basic policy cover, providing you with better coverage and financial protection. While the basic policy offers the financial safety to protect you, riders can cater to unforeseen and unexpected circumstances like accidental death, permanent disability, and terminal illness among other such conditions.

Some common riders availed by policyholders include an accidental death benefit, critical illness, permanent disability, etc. Based on your requirements, you can avail of one or more riders along with your basic life insurance policy. The insurance premium will then be based on the policy cover and riders that you choose.

CONCLUSION

In conclusion, it always best to know what your insurer has to offer so that you can get the most out of your life insurance policy. It is recommended that you analyse and research possible riders that can meet your future needs.