How to get more juice out of your insurance plan with Riders

12th June 2017

An insurance plan can add significant value to your family’s finances by securing their future in the event of an eventuality. There are ways, however, to make your insurance plan even more efficient.
Enter insurance riders
Ajinkya, a software yuppie, knows enough about life insurance to appreciate the need to buy a policy at the earliest.
While buying a term insurance plan, he come across riders and learns how they can make his insurance policy even more meaningful.
This gets him thinking and he does a bit of browsing to understand exactly how insurance riders work and how he can benefit from them.
How insurance riders work…
Think of insurance riders as an add-on to the insurance plan, a supplementary cover that is triggered under certain conditions. The rider benefits in addition to the life cover on the primary insurance policy. Riders serve to enhance the overall life cover under specific eventualities.
So this is how riders work –
Rider + insurance plan = enhanced cover
As you would have understood by now – riders are contingent in nature.They are ‘activated’ by specific events – the events they are meant to cover.If and when the event is triggered, the policyholder receives the rider benefit. Meanwhile the primary policy continues as it is.
For e.g. if the policyholder takes a disability rider, he will receive the rider benefit on the pre-specified disability. The benefit on his primary insurance policy continues as it is.
Riders for diverse needs
Ajinkya has learnt that there are riders available for a number of eventualities. Individuals can opt for riders based on their needs and specific medical conditions.
Some of these riders include:

  • The critical illness rider offers financial cover to the insured post diagnosis with defined critical illnesses like stroke, heart disease, cancer, kidney failure, among others
  • The disability rider extends benefits in case of affliction with a specific disability
  • The waiver of premium rider relieves the policyholder from paying future premiums in event of a mishap / accident
  • The loss of employment rider offers financial cover in specific cases of loss of employment

Once you add a rider…
Once Ajinkya attaches a rider to his primary insurance policy he will pay a dual premium- on the primary policy as also on the rider. So total premium is the sum of policy premium and rider premium.
Ajinkya can claim tax benefit under Section 80C on the total premium amount.
Riders can be very useful as we have seen. They can add considerable depth to the insurance policy. If selected carefully in line with the individual’s needs, they can boost the life cover considerably offering better financial support to the insured and his family.



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