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term life insurance policy

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Term insurance policy is a common type of life insurance policy that offers extensive financial security to one’s beneficiaries in the event of the policyholder’s untimely death.

When it comes to term insurance benefits, your loved ones can avail of life cover protection for a predetermined time or term; however, no benefits will be paid as a maturity benefit. Moreover, you can also enhance the term life insurance policy coverage with life insurance riders.

This article will explore how term insurance riders impact your policy’s benefits and premiums.

What are Term Insurance Riders?

As discussed, riders are the extra term insurance benefits that can be added to the base term insurance policy for an additional and nominal cost. These riders offer the policyholder and their beneficiaries additional protection in unanticipated circumstances, such as critical illness, hospitalisation, accidental disability and much more.

One can add one or more riders to their base policy at the time of policy purchase to receive the rider coverage. The rider sum assured, or the benefits are paid out as and when the covered events occur.

Types of Riders for Term Insurance

  • Critical Illnesses Insurance

This rider covers critical illness conditions such as cancer, heart disease, stroke, kidney failure, etc. In this, the critical illness insurance rider provides a lump sum payment to the policyholder to cover medical costs if any insured conditions are discovered while the policy is in effect.

  • Income Benefit

If the policyholder passes away during the policy’s term, this rider will give their beneficiaries a regular income. The death benefit is paid in addition to the income.

  • Waiver of Premium

This rider exempts the policyholder or their family from paying any future term insurance premium in the event of death or a permanent and total disability that leads to loss of income. In the event of the policyholder’s passing, the policy coverage continues even without the premium payment.

  • Accidental Death and Disability

This rider offers protection against sudden death or a total and permanent disability brought on by accident and pays out a lump sum to them or their beneficiaries for added financial security.

The Tata AIA term plan comes with various optional riders that can be added before and after the policy’s term such as waiver of premium benefits, critical illnesses, accidental death, disability, and so on.

How Do Term Insurance Riders Influence the Term Insurance Premiums?

The cost of term insurance premiums increases because riders give the policyholder added coverage on the base policy’s coverage. The premium for the riders is determined by the scope of coverage, the length of the contract, as well as the age and health of the policyholder.

For instance, an additional premium payment will be required if a policyholder adds a critical illness insurance rider to their main term insurance policy. However, the rider’s age, health, and the coverage chosen by the policyholder will all affect the rider’s premium.

How Do Term Insurance Riders Affect Term Insurance Benefits?

Life insurance riders increase the scope of the term insurance contract protection and give the policyholder and their beneficiaries more security beyond the base plan’s offerings. In addition to the policy’s standard death benefit, the riders’ payouts are paid out when the covered events or risks occur.

For example, if a policyholder adds a waiver of premium rider to their base term insurance policy, their family will not have to pay any future policy premiums in the event of the policyholder’s death. Therefore, the beneficiaries can save the premium amount and also receive the death benefit, which further increases their financial security.

Conclusion

In the event of unforeseeable circumstances, life insurance riders offer the policyholder and their beneficiaries additional protection over and above the base policy’s sum assured. However, you will also have to pay additional premiums due to the additional coverage.

Hence, before introducing any riders to the term life insurance policy, carefully evaluate your insurance requirements and spending capacity to ensure that you invest in the right plan, which is also pocket friendly.

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