Riders are optional benefits that can be added in a primary life insurance policy purchased. These are the extra coverage options that are provided to you, along with the primary policy so that you can receive more benefits from a single plan. However, these riders come at an extra cost over and above your premiums.
Riders vary by insurance company and by policy, as do their workings and costs. Adding riders may increase your premiums so make sure to work out if the extra coverage is worth the cost. While there are many riders available, these are the most common:
Types of Life Insurance Riders
- Term Rider - When purchasing insurance, you may add virtually any form of term insurance to a base permanent policy in the form of a term rider. This is beneficial to policy owners who have a temporary need in addition to their long-term need.
- Waiver of Premium Rider - A waiver of premium rider ensures that you would not need to pay the premiums on your life insurance policy should you become totally disabled and can’t work. Most insurance companies limit the policy to age 65. If you are older than 65 and become disabled and are disabled for longer than six months, your premiums will be waived.
- Accidental Total and Permanent disability rider - A disability income rider allows you to collect regular income from the insurance company if you become totally disabled and can’t work. The policy will specify the amount of income and how long it will be paid. Some riders only pay if you became disabled from an accident, while others pay for an accident or illness.
- Critical Illness Rider - The critical illness rider requires the insurance company to pay you a lump sum if you’re diagnosed with one of the critical illnesses specified in the insurance policy such as: cancer, heart attack, stroke, kidney failure and others. Not all policies offer this rider; you might have to take a critical care policy separately.
- Accidental Death Benefit Rider - The accidental death benefit rider or double indemnity rider increases the death benefit if you die as the result of an accident. Sometimes this rider also includes additional payment for dismemberment; you would collect money if you lost a limb or your sight.
- Hospital Cash Benefit Rider - With this rider you get a pre-determined sum from the first day of hospitalization under the Daily Cash Benefit. This is independent of actual hospital expenses and the rider will be available throughout your hospitalization duration. This plan looks out for your hospitalization expenses through entry age spanning between 18 to 65 years and maturity age of 23 to 70 years, depending upon the plan chosen.
Every rider has its own benefits and can help you get multiple solutions with just one policy. Though it comes with an additional cost, it can all be worth it, if you make decision wisely for your needs.
Neha Panchal - Financial Content Writer
Neha used to be an Engineer by Profession and Writer by passion, which is until she started pursuing full-time writing. She's presently working as a Financial Content Writer, with a keen interest in all things related to the Insurance Sector.