Add-on offers or riders are best options for customising your present and future insurance needs. But you have to be careful while opting for one. This article provides a pocket guide for taking the right cover
In a bid to stand out above the pack in the face of increased competition, insurance companies have of late started offering add-ons to customise their products and make them more powerful.
These add-ons — or riders, as they are called — are a special policy provision or group of provisions that can be added to a policy to supplement the cover provided. They allow you to increase your insurance coverage or limit the coverage set down by the policy. Riders can also be blended according to your present and future insurance needs.
Riders are optional additional benefits that you can opt for with your insurance plan for a nominal extra amount. One important thing to remember, however, is that riders are always attached to the basic policy which a person takes. They cannot be bought separately or independently of a basic policy.
Notwithstanding these limitations, riders are increasingly becoming popular owing to the numerous advantages they provide both to the insurer as well as the insured. For instance, besides helping the insurer customise their policy and increase sales, they are also helping the insured take additional cover at the fraction of the price of a basic cover and also cover risks which are not considered important by a common man.
Till today insurance is not a thought-out and planned purchase for most Indians. As a result, many important insurance policies like critical illness cover and personal accident policy are not taken by a common man. Riders provide a chance to the insured to opt for such covers by merely ticking on a box. Hence, risks which would have been left out in the normal course get covered by them.
Riders also help one avoid owning excessive insurance as one doesn’t need to purchase separate policies for additional coverage. When the need arises, you can just get a rider at economical rates which helps cut premium costs. As there is no extra administration cost involved, the premium payable for riders is nominal (being as low as Rs 100 in some cases). More importantly, you also have the flexibility to stop the rider benefit without terminating the basic cover, which is not possible in the case of a separate policy.
Besides, each rider — such as Accidental Death and Disability (ADD) Rider, Critical Illness Rider, Waiver of Premium Rider, Income Benefit Rider, Surgical Benefit Rider and Hospicash Rider —has its own advantages. For instance, while the Critical Illness Rider protects the insured in the event of a critical illness, under the Waiver of Premium Rider, the future premiums are waived off if the insured becomes permanently disabled or loses his or her income as a result of injury or illness prior to a specified age. This rider is very useful in case of a child policy where the life assured is a minor and therefore does not have any paying capacity.
Similarly, if you travel a lot, using your car everyday, or if you work in a field where there is a high probability for accidental injury, yet you can’t afford to buy as much insurance as you need, then the Accidental Death Benefit Rider may be a good supplement for your insurance plan.
Sadly, however, not many people in India are still aware of the various riders available in the market. Even most insurance salesmen typically neither understand nor recommend riders. However, if used judiciously, riders can provide a great insurance cover against unforeseen events such as accidental disability, critical illnesses, accidental death or dismemberment.
Thus, riders help increase the scope of your policy. Still, since they come with a cost, it always makes sense to choose them with care. For this, it is important that an individual knows his needs and opts for a rider accordingly. For example, if he already has a mediclaim worth, say, Rs 500,000 and is not married, then opting for a Critical Illness Rider won’t make much sense. Likewise, for a young person below age 25, there is no need of a Critical Illness Rider unless the person’s family history is abnormal. However, for a person between age 25 and 35, it is important to have accidental death, dismemberment and disability benefit riders.
The choice of a particular rider depends upon the life insurance coverage needs of an individual, which depends upon various factors such as age, family responsibilities and income, among others. It is, therefore, critical for an individual to make a sound decision after ascertaining his needs.
The best risk management plan takes into consideration the client’s lifestyle (food habits, health, family history etc), working environment (stress levels) and income replacement need. Anything that doesn’t pass through this test is unnecessary.
Financial advisors and insurers also suggest that normally riders which provide protection for risk, for which separate standalone policies are not available, should be taken first. For instance, the Waiver of Premium Rider should be taken with the base policy and if the employer of the insured provides a high-value personal accident policy, then the ADD Rider can also be left out.
It must also be kept in mind that riders are not equal to full-fledged policies which are available to cover similar risks. For example, accidental death and disability is also covered under the personal accident policy. A personal accident policy also covers reimbursement of OPD medical expenses following an accident and loss of income following an accident. These benefits are not provided by the ADD Rider.
Insurance seekers, thus, must understand that while riders are important, they are essentially add-ons to an insurance policy. The life insurance cover, therefore, should always take precedence and be treated as the core necessity. Only after having adequately insured yourself, should you opt for riders.
In a bid to stand out above the pack in the face of increased competition, insurance companies have of late started offering add-ons to customise their products and make them more powerful.
These add-ons — or riders, as they are called — are a special policy provision or group of provisions that can be added to a policy to supplement the cover provided. They allow you to increase your insurance coverage or limit the coverage set down by the policy. Riders can also be blended according to your present and future insurance needs.
Riders are optional additional benefits that you can opt for with your insurance plan for a nominal extra amount. One important thing to remember, however, is that riders are always attached to the basic policy which a person takes. They cannot be bought separately or independently of a basic policy.
Notwithstanding these limitations, riders are increasingly becoming popular owing to the numerous advantages they provide both to the insurer as well as the insured. For instance, besides helping the insurer customise their policy and increase sales, they are also helping the insured take additional cover at the fraction of the price of a basic cover and also cover risks which are not considered important by a common man.
Till today insurance is not a thought-out and planned purchase for most Indians. As a result, many important insurance policies like critical illness cover and personal accident policy are not taken by a common man. Riders provide a chance to the insured to opt for such covers by merely ticking on a box. Hence, risks which would have been left out in the normal course get covered by them.
Riders also help one avoid owning excessive insurance as one doesn’t need to purchase separate policies for additional coverage. When the need arises, you can just get a rider at economical rates which helps cut premium costs. As there is no extra administration cost involved, the premium payable for riders is nominal (being as low as Rs 100 in some cases). More importantly, you also have the flexibility to stop the rider benefit without terminating the basic cover, which is not possible in the case of a separate policy.
Besides, each rider — such as Accidental Death and Disability (ADD) Rider, Critical Illness Rider, Waiver of Premium Rider, Income Benefit Rider, Surgical Benefit Rider and Hospicash Rider —has its own advantages. For instance, while the Critical Illness Rider protects the insured in the event of a critical illness, under the Waiver of Premium Rider, the future premiums are waived off if the insured becomes permanently disabled or loses his or her income as a result of injury or illness prior to a specified age. This rider is very useful in case of a child policy where the life assured is a minor and therefore does not have any paying capacity.
Similarly, if you travel a lot, using your car everyday, or if you work in a field where there is a high probability for accidental injury, yet you can’t afford to buy as much insurance as you need, then the Accidental Death Benefit Rider may be a good supplement for your insurance plan.
Sadly, however, not many people in India are still aware of the various riders available in the market. Even most insurance salesmen typically neither understand nor recommend riders. However, if used judiciously, riders can provide a great insurance cover against unforeseen events such as accidental disability, critical illnesses, accidental death or dismemberment.
Thus, riders help increase the scope of your policy. Still, since they come with a cost, it always makes sense to choose them with care. For this, it is important that an individual knows his needs and opts for a rider accordingly. For example, if he already has a mediclaim worth, say, Rs 500,000 and is not married, then opting for a Critical Illness Rider won’t make much sense. Likewise, for a young person below age 25, there is no need of a Critical Illness Rider unless the person’s family history is abnormal. However, for a person between age 25 and 35, it is important to have accidental death, dismemberment and disability benefit riders.
The choice of a particular rider depends upon the life insurance coverage needs of an individual, which depends upon various factors such as age, family responsibilities and income, among others. It is, therefore, critical for an individual to make a sound decision after ascertaining his needs.
The best risk management plan takes into consideration the client’s lifestyle (food habits, health, family history etc), working environment (stress levels) and income replacement need. Anything that doesn’t pass through this test is unnecessary.
Financial advisors and insurers also suggest that normally riders which provide protection for risk, for which separate standalone policies are not available, should be taken first. For instance, the Waiver of Premium Rider should be taken with the base policy and if the employer of the insured provides a high-value personal accident policy, then the ADD Rider can also be left out.
It must also be kept in mind that riders are not equal to full-fledged policies which are available to cover similar risks. For example, accidental death and disability is also covered under the personal accident policy. A personal accident policy also covers reimbursement of OPD medical expenses following an accident and loss of income following an accident. These benefits are not provided by the ADD Rider.
Insurance seekers, thus, must understand that while riders are important, they are essentially add-ons to an insurance policy. The life insurance cover, therefore, should always take precedence and be treated as the core necessity. Only after having adequately insured yourself, should you opt for riders.
