Life Insurance Riders: An Extra Layer of Financial Protection

Most people think of life insurance as a wise investment that protects one’s family in the unforeseen event of their death. Now, what if we told you that life insurance can also buffer your family’s financial security if something were to happen to you during your lifetime? 

An accidental disability that results in loss of income, a critical illness like cancer, or post-retirement healthcare expenses - nobody prepares for these. Fact is, life is unpredictable and if such an eventuality were to strike you, it could disrupt even the best of your financial planning! 

Before you start worrying, let us assure you that there is a solution for every one of life’s curve balls. We call them life insurance riders.   

What is insurance rider? 

As the name suggests, riders are additional provisions or covers that you purchase and add-on to your basic life insurance policy. This strengthens the financial value of your policy. 

Let us explain this with a rider in insurance example: 

When you plan a trip to a cold destination, you take a thick woollen coat to protect yourself. Now because there is a chance that it could snow there, you also pack thermal wear, a monkey cap, gloves, socks, shoes and a hot water bottle, to keep you warm. 

Rider meaning in insurance is like this. The thick woollen coat is your basic life insurance policy. The additional protective items you pack for emergencies are the riders. Simple isn’t it? 

Types of insurance riders 

Just as you would pack different items to protect you from the cold, similarly, there are different types of insurance riders to protect you from various uncertainties of life.  

1. 1) Waiver of Premium Rider: Premiums can prove to be expensive, especially when you take a high coverage amount. This would be even more difficult to pay if you become disabled or could no longer work as a result of injury or illness. Waiver of Premium rider waives off future premiums irrespective of whether you are able to work again or not. The policy stays active and you continue to enjoy all its benefits. 

1. 2) Critical Illness Rider: This rider protects you from the exorbitant treatment costs of certain long-term or life-threatening ailments as mentioned in the policy document. It also doubles up as an income replacement to cover your household expenses, especially if the disease has caused a loss of income. 

1. 3) Accidental Death Rider: You may be wondering why you need an additional rider when your life insurance policy covers accidental death. This life insurance rider pays an additional lumpsum amount to your nominee, in the event of death by accident. 

1. 4) Permanent and Partial Disability by Accident Rider: A disability by accident could result in temporary or permanent loss of income. In such cases, the insurer pays you a certain sum for a specific period, say 5 or 10 years. The insurer will also waive off all future premium payments while letting you access the policy benefits. 

1. 5) Income Benefit Rider: Worried about your family’s future expenses in case of the demise or disability of the breadwinner? This rider offers your family a regular source of income for a certain predefined number of years. 

How do life insurance riders benefit you? 

Yes, a life insurance rider comes at an additional cost. But look at how much they protect you from the things you may not have even taken into consideration.  

1. 1) Achieve your financial goals: The breadwinner’s death or disability can have a huge impact on your finances. Do you really want to compromise on your children’s higher education or your family’s long-term comforts? Riders offer you financial protection from unexpected events so that your wealth goals can continue without any disruption.   

1. 2) Get more for less: Riders allow for personalisation. Think about it, adding a rider to your existing policy makes far more financial sense than buying a whole new policy and paying more premium for extra cover. By choosing the riders you want, you can live life on your own terms. 

1. 3) Any policy, any rider: You can add a rider to policy you purchase – term, retirement, ULIP.  

1. 4) Tax saving: As the rider is an extension of your life insurance policy, you also enjoy tax benefits as per the prevailing tax rules. 

It is better to be prepared for the worst than let the worst disrupt the better part of your life. Do not leave things to chance. You have seen the multiple benefits a life insurance rider has to offer. If you need more clarity, speak to your financial advisor or insurance planner to evaluate which ones would be best suited to you and your family.