We obviously want to stay happily and healthily for a long, long time. However, there is always an uncertainty in terms of death, disability or disease. Life Insurance has been the most preferred tool to counter any such uncertainty. A Term Plan offers a good protection plan at affordable price. The sum Insured is payable to the nominee/s in the event of the Insured’s death.
With time, life Insurance products have evolved & so has term insurance. Now, you can have term insurance with additional benefits like –
Additional cover in case of death due to accident:
Illustration: Vikram buys a Term Insurance for Death benefit of INR 1 Crore and buys an accidental rider for additional cover of INR 50 Lakhs. In case of natural death, the benefit payable is INR 1 Crore but in case of an accidental death, the benefit payable will be INR 1.5 Crore.
Claim payout on Diagnosis of Critical / Terminal Illness.
Illustration: Sheela buys a term insurance for INR 1 Crore and buys a Critical / Terminal Illness rider for 20 years. 5 years down the line, if Sheela is diagnosed with any of the covered critical / terminal illnesses, Sheela will have the entire INR 1 Crore to take care of her medical expenses and other liabilities.
Waiver of Premium due to total permanent disability or due to diagnosis on critical illness:
Illustration: Ritesh buys a term insurance for INR 1 Crore & buys a Waiver of Premium / Critical illness Rider for 20 years. 5 years down the line, Ritesh is diagnosed with a covered critical illness or met with an accident which makes him totally and permanent disabled. Ritesh does not need to pay any future premiums and the policy will continue as normal till its maturity. If death occurs before policy maturity, INR 1 Cr will be payable to Ritesh’s nominee(s).
Option of Increasing the life cover at important stages like wedding, first child born & second child born / increase cover every year through top up options:
Illustration: Raveena buys a term insurance for INR 1 Crore and and buys the Option of Increasing the life cover rider for 20 Years. 3 Years down the line, Raveena gets married and the life cover is enhanced by INR 50 Lakhs. 2 years down the line, Raveena becomes a mother and the life cover gets enhanced by INR 25 lakhs. After 3 years, Raveena has a child again and the life cover gets enhanced by another INR 25 lakhs. This way, the overall cover becomes INR 2 Crore with increased responsibilities at different stages of life.Please note that the amount of cover enhancement may vary from policy to policy.
Flexibility to choose the policy term & the premium payment term subject to minimum & maximum age at entry & maturity.
Illustration: Laksh buys a term insurance for INR 1 Crore and buy this rider for the maximum term say 75 years but chooses to limit the premium payment for 20 years only. Laksh will have to pay premium for 20 years only but the insurance will remain effective till the age of 75 years.
- Whole Life cover:
Illustration: Leena buys a term insurance for INR 1 Crore and buys the Whole Life cover rider. The policy term is for the maximum term, say 75 years of age. Leena has to pay the premium till the age of 75 years, but her insurance will remain effective even beyond 75 years of age and whenever death occurs INR 1 Cr will be payable.
- Return of Premium Option:
Illustration: Murali buys a term insurance for INR 1 Crore and buys this rider for the maximum term, say 75 years. If Murali survives the policy terms, then the entire premium paid by Murali will be refunded.
In addition to above, term Insurance has the various claim payout options too.
- Lump Sum: (It is the most common & preferred method for having claim benefit in one go).
- Regular Income : (it is an economical option to have monthly income).
- Increasing income: (it is the financially smart option to have monthly income which is increasing every year to combat inflation. In this option, the total payable benefit also increases significantly)
- Lump Sum + Income: (Part of the benefit, as mutually agreed, will be paid as lump sum and the remaining will be payable as the monthly income)
To understand how insurance companies have interwoven riders into their products let us have a look at some specific products that offer riders. We are going to have a closer look at ICICI Pru iProtect Smart, HDFC Life Click to Protect 3D plus and Kotak e-Term Plan.
ICICI Pru iProtect Smart
ICICI Pru iProtect Smart offers to cover all the additional benefits/Special riders as mentioned above.
This plan has four variations, named as ‘Life’, ‘Life Plus’, ‘Life & Health’ and ‘All-in-one’. Let’s understand what these variations have to offer in terms of additional benefits;
|Additional benefits||Life||Life Plus||Life & health||All-in-one|
|Death/Terminal illness benefits(Including AIDS)||Yes||Yes||Yes||Yes|
|Waiver of Premium of Disability||Yes||Yes||Yes||Yes|
|Accidental Death Benefit(Max up to INR 2 Cr)||No||Yes||No||Yes|
|Critical Illness benefit(Max up to INR 1 Cr)||No||No||Yes||Yes|
One who wishes to have all the additional benefits to be covered can opt for All-in-one plan of ICICI Pru iProtect Smart policy.
USP of ICICI Pru iProtect Smart Plan
- Maximum Policy term up to the age of 75.
- 34 Critical illnesses can be covered and claim benefit is paid on first diagnosis of any of the 34 critical illnesses as mentioned in policy. ( Let’s assume, Mr. X buy this cover with the base cover of INR 1 Cr & CI cover of INR 30 Lakh with annual premium of INR 15,000. 3 years later Mr. X is diagnosed with cancer. INR 30 lakh is paid as lump sum & the policy continues with remaining sum insured of INR 70 lakhs. Subsequent premiums are proportionately reduced to INR 6000 annually. On Mr. X’s unfortunate death, his nominee gets the lump sum Death benefit of INR 70 Lakhs & the policy terminates.)
- Terminal illnesses covered & it includes AIDS, too.
- Four flexible claim payout options as follows;
|sum pay||Regular Pay||Increasing income pay||Lump sum + Income pay|
|Entire benefit pays as lump sum||10% of the benefit amount is payable every year for 10 years with the option of having advance the first year’s income as lump sum & remaining as monthly EMI for 9 years.||Just like the regular pay but the income will increased by 10% per annum simple interest every year thereafter.||Insured have the flexibility to split the life cover benefit to be paid as lump sum & as monthly EMI.|
HDFC Life Click2Protect 3D plus
This product aims for a comprehensive protection against uncertainties that life may throw at anyone. This plan has 9 variations to customize anybody’s need in terms of coverage. Let’s understand what these variations have to offer in terms of additional benefits;
(By any cause)
|Acceleration of Death benefit
|Waiver of premiums
(Accidental total permanent
|Extra life sum insured
|Waiver of premiums
|Return of premiums
|3D life option||Yes||Yes||Yes||No||Yes||No|
|Extra life option||Yes||Yes||Yes||Yes||No||No|
|Extra life income option||Yes||Yes||Yes||Yes||No||No|
|Income replacement option||Yes||Yes||Yes||No||No||No|
|Return of premium option||Yes||Yes||Yes||No||No||Yes|
|Lifelong protection option||Yes||Yes||Yes||No||No||No|
|3D lifelong protection option||Yes||Yes||Yes||No||Yes||No|
USP of HDFC Life click2protect 3D plus:
- Customization of plan by offering 9 options to choose from.
- Protection for whole life with lifelong protection plan.
- Flexibility to increase the cover every year through top-up option.
- Return of premium options, if you survive the policy terms.
- CI benefits works differently here. On Diagnosis of CI (one of the 34 CI mentioned in policy), future premium will be waived off and policy continues and if the insured dies within policy term then whole benefit is payable at death.
Kotak e-Term plan with option of Kotak Critical illness plus benefit rider
Kotak e term plan is simple protection plan with the option to have some important benefits to be covered. This plan have 3 variations namely ‘Life’, ‘Life plus’ & ‘Life secure’ with 3 different payout options i.e. Immediate payout, Level recurring payout & Increasing recurring payout.
Let’s understand what these variations have to offer in terms of additional benefits;
|Life||Life Plus||Life Secure|
|Natural Death||Sum Insured payable||Sum Insured payable||Sum Insured payable|
|Accidental death||Sum Insured payable||Sum insured + Accidental benefit payable||Sum Insured payable|
|Total & permanent
|N/A||N/A||Waiver of all future premiums
& policy continues till policy term expires
USP of Kotak e term plan;
- 37 Critical illnesses can be covered by opting for Kotak Critical illness plus benefit rider. Let’s understand this benefit with more clarity. In the event of CI diagnosed the lump sum is payable, provided life insured survives at least for 30 days following diagnosis of the said critical illness. 100% of the rider sum assured is payable on diagnosis of cover critical illness other than angioplasty, & in case of angioplasty 100% of the rider sum assured is subject to a maximum of INR 5 lakhs. The rider benefit shall terminate in case the rider sum assured is up to INR 5 lakhs & if it is more than INR 5 lakhs then it continues for the balance rider sum assured.
- Increasing life cover at milestones/every year is known to many, but how about lowering the life cover (Step down) at the stages when responsibilities don’t remain the same. One can opt for this and save premium on reduced sum insured. (Please refer to specific t&cs of this offer).
We discussed the riders/additional benefits offered by three Life Insurance companies. All three products discussed above are reasonably good. Depending upon one’s choice & preference for riders, we can conclude that –
- ICICI product is fit for those who wish to cover all special riders available along with AIDS.
- HDFC product is fit for those who wish for Whole life protection option, & refund of premium option along with special rider/s protection.
- Kotak product is fit for those who just want to be reasonably covered.
One should always refer to the policy wordings to understand the Eligibility criteria, Critical illness covered & respective rider benefit, how the benefits are payable, how the insured event/s is defined, How the Sum insured is defined under single pay option/regular pay option/limited premium payment option and standard/specified exclusions.
Try our comparison calculator to compare different plans and select the one that suits your special requirement.