A Life Insurance Policy is essentially a contract between an insurance holder and an insurance company wherein the parties agree to certain conditions which provide the policyholder a lump-sum amount of money in case of his/her death. Sometimes, these policies might not prove to be useful or claimable by the holder in need due to some conditions and terms applicable. That is where ‘Riders’ come into the picture.
A rider on an insurance policy is an add-on contingent benefit that can be added to your policy by paying extra. A person applying for an insurance policy is purely at will to opt for one or more rider(s) or none at all.
However, opting for riders may prove to be the right choice for certain unforeseen events. For example, one may suddenly be subjected to temporary or permanent disability or there may be unexpected hospital bills to be paid wherein an insurance policy cannot be claimed. In these cases, riders can be handy.
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- A rider can be claimed in cases where one may need coverage outside of the insurance policy.
- One can choose from a wide range of riders depending on the holder’s necessity and requirement.
- Some policies allow the holder to add a rider anytime he/she wishes during the policy period.
- In some cases, riders provide specific tax benefits subject to prevailing tax laws.
- However, a rider might not always be necessary and might just be an additional expense, ultimately being of no use.
- Riders end with the maturity of the primary policy they are attached with.
- There might be a lot of terms and conditions for claiming the benefit of the rider.
Commonly opted-for insurance policies in India such as Kotak’s Preferred Term Plan, Aegon Religare’s iTerm and ICICI’s iProtect also provide some common, useful riders a holder might opt for such as:
- Accidental Death Rider.
- Critical Illness Rider and
- Temporary/Permanent Disability Rider.
1. Accidental Death Rider
An Accidental Death rider is one of the add-on subscriptions to a life insurance policy wherein the nominee or beneficiary of the insured receives an additional amount apart from the amount he/she is eligible for through the policy. This is applicable when the holder dies due to an accident and not because of an illness or as a result of harmful habits.
An Accident and Disability rider under this provides a minimum of Rs. 1,00,000 benefit and a maximum equal to Sum Assured by the holder subject to limits of the Board.
Conditions applied are that the death should not be due to any form of suicide whatsoever or engaging in hazardous sports including skydiving and paragliding. Death due to war or civil unrest is also not covered under this rider. This policy is also applicable only even the holder succumbs to injuries or bodily damages due to an accident within 180 days of the mishap.
Aegon Religare’s iTerm:
Aegon’s iTerm Accident and Disability rider provides a minimum of Rs.10,00,000 and a maximum equal to the sum assured. The premium starts from a minimum of Rs. 450 per annum. This policy is claimable only if the holder succumbs to injuries of the accident within 90 days of the occurrence. If the cause of the death is suicide which is committed within a year of the inception or revival of the rider and the rider is in force, the nominee will be eligible to 80% of the Rider premiums paid until then. However, he/she will not receive the rider’s benefits in such cases.
Also, the benefit will not be provided if death occurs due to civil riots including war and terrorism, consumption or inhalation of hazardous chemicals, liquors and gases and participation is aerial flights apart from commercial airplanes.
2. CRITICAL ILLNESS RIDER:
A Critical Illness Rider is added to a life insurance policy and covers the insured against financial loss occurred due to a “critical” illness diagnosed after applying for the policy. It is paid out after diagnosis hence cost of treatment, and other financial needs can be met that are otherwise unavailable since the holder could not continue working.
Illnesses covered under this rider are specific in terms of the insurance company one opts for, but certain diseases such as Cancer, Heart Attack, Paralysis, Kidney failure, etc. are generally covered in every company.
A minimum of Rs.1,00,000 will be paid to the insured under the rider in ICICI’s iProtect policy, and the maximum will be based on the sum assured limited to the policy of Board.
A total of 34 diseases are covered under this rider including Cancer, Angioplasty, Brain Tumor, Open Heart Surgeries, etc. subject to conditions and terms of their own.
A CI rider under this policy cannot be claimed on illnesses caused due to STDs, HIVs and AIDS or even under circumstances such as war, aviation (apart from commercial airplanes), etc.
Aegon Religare’s iTerm:
The insured is eligible for a minimum of Rs.10,00,000, and a maximum of Rs.50,00,000 under the CI rider of iTerm and the premium is to be paid annually. Cancer, Open Chest Coronary Artery Bypass Grafting, Stroke and First Heart Attack are the diseases covered under this subject to terms and conditions of their own. One needs to wait for 90 days from the inception or revival of the rider to be able to claim the benefit, and the assured should survive at least 30 days from the date of diagnosis to be able to claim. Self-inflected injuries, HIVs, pre-existing diseases, etc. are not covered under this policy.
2. DISABILITY RIDER:
A Disability Rider, also called as a Disability Income Rider protects the insured against financial losses due to the occurrence of a permanent disability.
In case the insured is disabled for over six months, and he/she is not in a position to return to work and earn, this rider will provide him/her a certain amount based on the terms and conditions of the policy opted for. This usually continues until the expiration of the policy or until a certain age, and future premiums on this raider will be waived off. But for this to be claimed, written documents and proofs from a medical examiner are required.
The terms of this rider are quite simple- all future premiums from the point of disability are waived off without having to compromise on any other benefits and payouts.
Aegon Religare’s iTerm:
The entry age for the rider under this policy is 18 years minimum and 65 years maximum. This rider covers the insured until he/she turns 75 years. The disability must occur due to accident or sickness, and there is a waiting period of 180 days from the date of occurrence in case of disabilities such as loss of eyesight, hearing, speech and even loss of use of limbs. Once the disability is proved, a lump-sum amount of minimum Rs.5,00,000 is paid out. However, total sum assured must not exceed more than Rs.10,000,000.
Future premiums of the base plan are immediately waived off on such an occurrence.