Insurance riders are add-ons that you can add to your existing insurance policy to expand coverage and protection. They can be added at the time of purchasing a new policy or renewing an existing policy.
Each rider comes at an additional cost as it provides more protection than the standard insurance policy. You can select as many riders as you need for home insurance, life insurance, term insurance, and motor insurance. The more riders you add the better coverage your policy provides.
Why riders are important in insurance?
Now that we have covered what is a rider in insurance, let us understand why they are significant. An insurance rider offers greater flexibility as it personalizes the insurance policy to cover what is most important to the policyholder. Due to its low cost, you do not need to spend too much to get maximum coverage. It saves you the effort of applying for a brand-new insurance policy because you need additional coverage as you can simply add riders.
What are the types of insurance riders?
The types of riders in insurance are based on the insurance category. Each insurance category has its own set of insurance riders.
Life Insurance riders
1. Accidental death benefit rider
Accidental death benefit rider provides the nominee with the sum assured and the rider benefit if the policyholder’s accidental death occurs. Many times, the instant death of the policyholder does not occur after an accident. In such cases, the insurance provider will provide the benefits such as a sum assured after a certain period of 3 to 4 months. This is one of the most common insurance rider types.
2. Critical illness rider
The critical illness rider is one that most people often take in the life insurance category because it is most likely to happen. A critical illness rider covers a broad range of common illnesses such as cancer, heart-related ailments, organ failure, and so on. It is best to choose this rider when you have already been diagnosed with a particular critical illness listed in this rider. People who regularly consume any tobacco product or alcohol should purchase this rider.
3. Accidental total and permanent disability rider
One of the life insurance riders is the accidental total and permanent disability rider. This one offers protection if the policyholder suffers from an incurable or permanent disability due to an accident. A permanent disability means the person is unable to perform his/her duties and earn money. It also includes the inability to pay premiums. Although it is generally available as a standalone rider, it is often purchased alongside an accidental death benefit rider.
4. Term rider
The term rider is one of the simplest riders to understand in the life insurance category. It is when the policyholder passes away unexpectedly due to any cause and the nominee gets a lump sum. The nominee may receive a monthly income instead too and it depends on the terms and conditions of the life insurance policy. The base plan coverage can be the amount received as rider benefit or it can be the sum decided at the time of policy purchase.
5. Waiver of premium rider
The waiver of premium rider is when the next premiums to be paid are waved off when the policyholder becomes disabled due to an accident thereby preventing him/her from paying the premiums. It is a common life insurance rider and is often purchased clubbed together with either the critical illness rider cover or the accidental total and permanent disability rider. You can also purchase it by itself if you wish by adding it to your base policy.
6. Hospital cash rider
One of the life insurance riders is the hospital cash rider. In this, a certain fixed amount of the rider benefit is extended to the policyholder when s/he is admitted to a hospital for treatment. However, this depends on the expense incurred per day during the hospitalization. This rider is purchased by itself but can be purchased alongside any other life insurance rider.
7. Accelerated death benefit rider
The accelerated death benefit rider is for those policyholders who have been diagnosed with a terminal illness. The insurance provider gives a portion of the sum assured to the policyholder in advance. This amount is used for treatment including the hospital stay of the policyholder. Sometimes, the policyholder may pass away when getting treated. In this case, the sum assured left will be given to the dependents of the policyholder.
8. Surgical care rider
A surgical care rider is a type of life insurance rider. It is when the policyholder must get immediate medical surgery within India and there is no other treatment option. In this rider, the policyholder will receive a lump sum from the insurance provider. The rider benefit is not uniform across surgeries and depends entirely on the type of surgery that must be performed.
9. Income benefit rider
The income benefit rider is when the policyholder passes away unexpectedly during the policy term and the family members of the deceased receive a monthly income. The monthly income is the same as the monthly income of the deceased when s/he was alive. The duration of this is pre-decided and mentioned in the policy.
Also Read: 5 Reasons to Add Riders to Insurance Policy
Term insurance riders
1. Accelerated death benefit rider
Accelerated death benefit rider in term insurance is when the policyholder is suffering from a terminal illness. This can be liver damage, lung ailments, cancer, organ failure, and so on. In this rider, the policyholder’s family receives some sum assured so it can help with the treatment. This is a recommended rider as terminal illnesses are becoming rampant in India and can affect anyone.
2. Child support benefit rider
The child support benefit rider is one of the rider insurance types that is recommended by experts because of its importance. It provides cover and protection to children in case the policyholder passes away. The children receive a sum assured and the children do not suffer due to the unexpected death of a parent.
3. Accidental death benefit rider
The accidental death benefit rider is when the policyholder passes away due to an accident and an additional sum assured is provided to the dependents. The amount of the additional sum assured can vary from one insurance provider to another and is calculated based on the original sum assured. Note that the premium remains the same in this rider for the direction of the entire policy term.
4. Accidental disability benefit rider
The accidental disability benefit rider is useful when the policyholder suffers from a disability, either partial or permanent. Generally, the policyholder can be paid for 5 to 10 years after the accident takes place whereby the policyholder becomes disabled. It is often purchased with the accidental death rider in the term insurance category.
5. Waiver of premium rider
The waiver of premium rider is when the premiums are waived off when the policyholder is unable to pay future premiums. This can be caused due to income loss or disability. If the policyholder does not have this rider and he becomes disabled thereby preventing him from paying the premium, the term insurance policy will expire and he will receive no death benefit.
6. Critical illness benefit rider
The critical illness benefit rider is when the policyholder is diagnosed with a critical illness that is specified in the policy and s/he will receive a particular lump sum when the diagnosis is made. Some of the common terminal illnesses that are covered in term insurance policies are paralysis, cancer, heart attack, and stroke. It is possible to terminate the policy or continue it after the diagnosis is made depending on the policy particulars.
7. Income benefit rider
With the income benefit rider, the family members of the policyholder will receive the sum assured and additional income for a period of 5 to 10 years in case the policyholder passes away unexpectedly. It can be seen as a source of income and is one of the popular types of rider insurance in the term insurance category.
Also Read: Riders you must opt for in your term insurance
Health Insurance riders
1. Hospital daily cash
The hospital daily cash is a type of health insurance rider whereby the policyholder receives a fixed daily allowance for a certain period during a hospital stay. This period is generally a few days. The daily cash allowance can be used to avail of medical services which are not a part of the health plan. It is a highly recommended rider because it protects you in the case of a medical emergency.
2. Maternity cover
The maternity cover protects the policyholder by covering the expenses that occur during childbirth as these are often not covered in health insurance plans. You can only put forward a claim after the waiting period is over. What maternity cover can vary from one insurance provider to another as some only provide cover for delivery expenses while others can provide broader coverage.
3. Personal accident cover
The personal accident cover provides the policyholder with safety in case s/he is permanently disabled, dies due to an accident, or suffers from a partial disability. The rider benefit depends on the disability type and extent of the injury. It is an important rider cover because it enables you to manage your medical expenses with ease.
4. Room rent waiver rider
The room rent waiver rider is when the room rent is waived during your hospital stay. Generally, health insurance policies have a certain limit covered for room rent and you have to pay the remaining if the limit is crossed. This ensures you can pick the room of your choice while being covered by this rider.
5. Critical illness cover
The critical illness cover protects in the case of a critical illness of the policyholder. As a base health insurance policy does not cover all illnesses, this rider ensures you are safe from financial distress in case you are diagnosed with a critical illness. The policyholder gets a sum assured amount from the insurance provider.
How to choose an apt rider for your insurance policy?
You need to consider the following three factors before choosing insurance riders that are right for your needs.
Requirements
Consider what your needs are right now and how they may change shortly. Determine the type of coverage you need before you shop around for rider insurance so that you avoid adding more riders than you need. Only purchase riders that will provide the extra coverage that you need.
Budget
When you add a rider, you will be paying a rider premium. This is why keeping your budget in mind is crucial when adding a rider to your existing policy. If you feel like adding all the riders you need is getting expensive, consider only keeping those you need and removing the rest.
Terms and conditions
Before you say yes and choose insurance riders you must read the fine print carefully. You may assume the coverage level based on the rider’s name even though it may not provide extensive protection. By reading the terms and conditions of each rider, you will know exactly what you are and are not getting.
Key takeaways
Many types of riders in insurance exist based on the type of insurance policy you purchase. For example, some life insurance riders are critical illness riders, accidental death benefit riders, and income benefit riders. The rider benefit is that it extends protection at a lower cost thereby giving you peace of mind. It is advisable to take your time before buying riders. When researching and selecting insurance riders, make sure to determine your budget, and requirements, and read the fine print.
FAQs
When I cannot add a rider to the policy?
You can add a rider when you purchase your insurance policy. In some cases, the insurance provider may allow you to add the rider up to a certain date. It is not possible to add a rider without a base policy.
What are the rider levels?
The rider levels in term insurance are the period up to which the rider is valid.
What is the difference between a rider and an endorsement?
A rider is the same as an endorsement and the two terms can be used interchangeably.
