Homepersonal finance News

    Increase your coverage with life insurance riders; here are your options

    Increase your coverage with life insurance riders; here are your options

    Increase your coverage with life insurance riders; here are your options
    Profile image

    By Anshul   IST (Published)

    Mini

    A rider is an insurance policy provision that adds benefits to or amends the terms of a basic insurance policy such as additional coverage.

    Life insurance plans primarily cover the uncertainties of life. However, there are several unforeseen risks during which life insurance may not help much. For such conditions, experts advice policyholders to attach riders to their policies.
    A rider is an insurance policy provision that adds benefits to or amends the terms of a basic insurance policy such as additional coverage. These come at an extra cost—on top of the premiums an insured party pays.
    "Policyholders can attach health riders to a basic term plan to make it more effective in the event the customer is diagnosed with a critical illness. Riders help in making the plans more potent and cover multiple aspects of risk that a customer could encounter," explains Karthik Raman, chief marketing officer and head – products, IDBI Federal Life Insurance.
    (Also read:
    Death or disability of the policy-owner can cause serious financial strain to the family.  Along with regular expenses, ability to continue planned investments comes under stress.
    "In a situation like this, protection plans and waiver of premium riders attached to insurance plans act as the saviour," says Samit Upadhyay, chief financial officer and head – product, Tata AIA Life Insurance.
    Ideally, an individual should look at attaching riders to term plans when purchasing them.
    "Considering the current cost of treatments, one should opt for a critical illness and accidental death and dismemberment rider along with the base term policy to ensure protection against all three risks – death, disease and disability," added Upadhyay.
    When compared to mediclaim policies (that largely covers cost of treatment), the term plan with health riders provides funds which are required during the recovery process when the customer may not have income, according to Raman.
    Also, policyholders can claim additional tax deduction with life insurance policies with riders.
    For a life insurance policy, tax deduction under section 80C of the Income Tax Act (1961) allows exemption up to Rs 1.5 lakh per annum.
    "However, premiums paid towards health riders is also eligible for tax deduction up to Rs 1 lakh per annum under section 80D of the Income Tax Act (1961)," says Aalok Bhan, director and chief marketing officer, Max Life Insurance.
    Here's a list of insurers offering term insurance (along with riders) to a 35-year-old made living in a metro city, according to Policybazaar:
    The sum assured of the plans is Rs 1 crore and the policy is valid up to 70 years of age.
    InsurerPlan NamePremiumRidersPremiumTotal Premium
    ICICI Prudential Life InsuranceiPRU iProtect SmartRs 18,799Accidental Death Benefit RiderRs 561Rs 19,360
    Critical Illness RiderRs 6,418Rs 25,217
    HDFC LifeClick 2 Protect PlusRs 16,275Critical Illness RiderRs 5,493Rs 21,768
    Accidental DisabilityRs 319Rs 16,594
    Max Life InsuranceMax Life Smart Term PlanRs 14,042Accidental Benefit RiderRs 708Rs 14,750
    Critical Illness BenefitRs 5,676Rs 19,718
    TATA AIA LifeTata AIA Life Insurance Maha Raksha SupremeRs 16,638Accidental Death and DismembermentRs 106Rs 16,744
    Critical Illness BenefitRs 3,278Rs 19,916
    Bajaj AllianzBajaj Allianz life Smart Protect GoalRs 10,359Accidental Death BenefitRs 851Rs 11,210
    Critical Illness BenefitRs 6,749Rs 17,108
    (Source: Policybazaar)
    Nevertheless, an individual should analyse every aspect before going for any policy, opine experts.
    "Riders with life insurance are comparatively cheaper. However, their coverage is limited to the extent of sum assured and premium payable under life insurance base policy. So while cost does matter, what is more important is the financial needs of an individual, which one should consider before making a buying decision," explains Sanjay Tiwari, director, strategy at Exide Life Insurance.
    Check out our in-depth Market Coverage, Business News & get real-time Stock Market Updates on CNBC-TV18. Also, Watch our channels CNBC-TV18, CNBC Awaaz and CNBC Bajar Live on-the-go!
    arrow down

      Most Read

      Market Movers

      View All
      CompanyPriceChng%Chng