Riders are typically designed to meet specific needs ranging from additional life insurance cover to additional benefits upon accidental death/ disability or hospitalization or critical illness or even additional protection for other life events.Riders, when chosen appropriately, can help you get benefits that are much needed in addition to the benefits under an insurance policy. Riders can be understood as a supplementary (baby) policy to your main policy which adds to the benefits under the base plan. There will be a nominal charge to boost the insurance element under your policy against different conditions/unforeseen incidences.
Riders are typically designed to meet specific needs ranging from additional life insurance cover to additional benefits upon accidental death/ disability or hospitalization or critical illness or even additional protection for other life events.
As the name suggests, riders will ride on the base policy and hence it is important to ensure whatever rider you opt for, adds value to the proposition you opt in for.
For example, most of your financial milestones will not change even if you are not around or have met an untoward event e.g. your kids will still go to college when they are 17, go for higher education at age 21, get married at age 25/28, you/your spouse would need financial support for old age etc. Hence waiver of premium is most meaningful one, especially along with the savings insurance plans. The waiver of premium is offered as a rider with some products whereas some also offer this as a product option – whichever way, they serve the same purpose.
Another important incidence in life is an ill health condition. Statistics say that over 70% of healthcare expense in India is out of pocket, which means people pay on their own without any insurance support. Such an event can potentially wipe off or significantly reduce your savings which you would have planned for some other life event like kid’s education, kid’s marriage or own retirement. Thus, opting for a medical insurance that reimburses the cost of treatment supplemented with a fixed benefit critical illness plan/rider that pays a lump sum is strongly recommended.
There are expenses beyond the cost of treatment including requirement to change the diet pattern or lifestyle or recoupment of loss of income caused due to illness. The critical illness riders/plans offered by life insurance companies will pay a lump sum over and above your medical insurance claim, thereby allowing you to overcome the financial burden after the illness, with ease.
Accidental death or disability/dismemberment riders cover specific events where the cause is accident. Again, the benefit payable is in addition to that payable under the base plan. At the initial years of working, the savings are not adequate enough to meet all the liabilities and hence financial impact of any unforeseen event due to an accidental can be mitigated through accidental riders/plans. And last but not the least, a Term Rider adds to the amount of life insurance cover and pays additional money upon death. Term rider boosts the insurance cover and allow the family of the deceased meet the financial liabilities.
Some products have also started offering these riders as a product feature or option. It serves the same purpose, and is worth to pay a small incremental premium towards such benefits, which helps in a big way to the insured or to the nominee in case of an untoward and unforeseen event.
(By Bikash Choudhary, Chief Risk Officer/Actuary at Future Generali India Life Insurance Co Ltd)
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