A long with basic cover, a life insurance policy also offers additional benefits to widen protection. Comprehensive coverage is important for people who have taken loans, so that their families do not have to struggle to repay them in the event of an unforeseen mishap. Among the many riders on offer, the three most popular ones are: term rider, accidental death benefit rider and critical illness rider. Here is a lowdown on what these are and whether one should buy them as riders on a life insurance policy or as separate policies from a general insurer.
- A pure protection plan, it offers additional risk coverage in case of death.
- You can pay a one-time premium or regular premiums.
Accidental death benefit rider
- Provides additional sum assured on death due to accident.
- Can be bought with life insurance policy as rider with base policy. But separate policies offer comprehensive coverage with disability cover option.
- The last provides you with a living benefit in case of permanent or partial disability leading to loss of income.
Critical illness rider
- CI cover offers protection against major critical illnesses, such as cancer, heart and artery, major organ, brain and nervous system benefits.
- Payment can be made in lump sum, on first occurrence of illness.
- The additional rider is terminated on payment of CI Benefit, but the policy continues.
Buy a rider or a separate policy?
- Individual policies always offer more comprehensive coverage than buying cover as a rider. For example, most life insurers offer only personal accident policy as a rider. But if you buy it as a separate policy from a general insurer, permanent and total disabilities too are covered, apart from death coverage.
- On the price front, riders may look cheaper, but the coverage is limited. Before buying, always compare coverage and do not base your decision on premium rates alone.
- A personal accident rider can be bought at a premium of around Rs 500. But comprehensive coverage (permanent and temporary disability) under individual policies is available for a premium up to Rs 1,000.
- Riders also do not allow much flexibility. For example, the rider premium cannot be more than 30 per cent of the base premium. Similarly, sum assured in a rider cannot be higher than sum insured under base policy.
- There is no shortage of options to choose from. But the more the choices, the more crucial it becomes for you to make the right choice. Do your research before opting for a policy with extended additional benefits.
Pradeep Pandey CMO, Future Generali Life Insurance, says, "Riders along with basic policy from the life insurers is what is advice able, having an additional accident or critical illness benefit coverage lowers the burden for family in case of an uncertainty"