What Is a Rider in a Life Insurance?

What Is a Rider in a Life Insurance?

The whole intent of buying a life insurance policy is to buy cover against unforeseen incidents of the future. These incidents or events can prove to be quite devastating for the finances of your family. Having a good life insurance policy would ensure that your family members need not worry about the financial aspect of life.

However, what if you feel that your life insurance policy is not enough? What if you wish that there are some additional benefits? Does it mean that the policy that you bought is a waste of money? Well, not really. This is where riders come into the picture.

A rider or an add-on are additional features that you can plug into your existing life insurance policy by paying a small amount in the form of premiums. Though you will end up paying a slightly higher premium, your policy becomes a lot more comprehensive and effective. The basic features of your policy remain intact and the rider just elongates the features or benefits list.

Some of the Well Known Riders in Life Insurance India

Since a rider is an additional benefit or feature, it varies from insurer to insurer. Though you will not find major differences but some variations. The following is a list of some of the most recognized and opted for life insurance riders that your money can buy today.

  • Premium Waiver

The premium waiver rider is one of the most preferred riders that one can buy at this point. This rider ensures that your policy does not lapse in the event of non-payment of renewal premium. Most insurers let you avail this benefit for a specific period of time if you are unable to do the same. The rider will take care of your premiums if due to some financial constraints or lack of job you cannot pay the premiums. The rider can waive off all future payments while still retaining the benefits of the policy.

  • Accidental Death

A life insurance policy would have accidental death benefits by default. However, if your line of work includes substantial accidental hazards or you want to leave a handsome amount of money for your family to continue with their lives, this rider is apt. In most of the cases this rider doubles the sum assured that your base policy has. It must be noted that a policy holder will receive accidental death benefits even in the absence of this rider.

  • Critical Illness

A few of the modern day policies cover critical illness cover out of the box. If your policy does not cover the same, you can opt for this rider. It is no secret that the diagnosis of a critical illness can amount to large amounts in treatment. On adding this rider, if a policy holder is diagnosed with a critical illness, the policy will pay a predetermined amount. This amount can be used for treatment and other medical purposes.

  • Disability

There are a lot of negative outcomes of an accident. Disability of any form being one of them. If the policy holder suffers from permanent disability or temporary disability, the rider kicks in and saves the day. The rider will then act as a source of income and provide payouts in certain percentage of the sum assured.

  • Income Benefits

Sudden deaths can be devastating for family, especially if the person is the bread earner of the family. If a policy holder selects the income benefits rider, the same will act as a regular source of income for the family left behind. The sum assured is passed on to the family at regular intervals and in a certain predefined percentage.

What Changes Did GST Make in Life Insurance in India

The GST or Goods and Services Tax is one of the largest tax reforms that the country has witnessed in decades. The reform was implemented on the 8th of August 2016. The intent of the reform was to bring about uniformity in taxes.

For most of the insurance products, policy holders usually have to pay service tax. As per the GST rules and guidelines, service tax was hiked to 18%. This directly translates to slightly higher premiums for life insurance products. For starters, the service tax on a term insurance plan before the reform was 15% but with the new slab, one would have to pay additional 3%. Similarly, an endowment plan used to attract 3.75% as taxes but now the same stands at 4.5%.

Even after a slight bump in the prices, life insurance products remain relevant as ever. It should not drive one away from availing the various benefits of the plans.

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