Importance of adding riders in insurance policy

Riders, when chosen correctly, can help you get benefits that are need in addition to benefits under an insurance policy. Riders can be seen as a supplementary (baby) policy to your main policy which adds to the benefits under the base plan.

There will be a nominal charge to boost the insurance element under your policy against different conditions/unforeseen incidences.

The riders are designed to meet specific needs ranging from additional life insurance cover to additional benefit upon accidental death/disability, hospitalization, critical illness, or further protection for other life events.

As the name suggests, riders will ride on the base policy, and hence it is important to ensure whatever rider you opt for adds value to the proposition you opt-in for.

For example, most of your financial milestones will not change even if you are not around or have met an untoward event, e.g., your kids can still pursue their studies, they can get married and financial support to your spouse for old age, etc.

Hence waiver of premium is the most meaningful one, especially along with the savings insurance plans. The waiver of premium is offered as a rider with some products, whereas some also offer this as a product option – whichever way, they serve the same purpose.

Another important incidence in life is an ill-health condition. Statistics say that over 70 per cent of healthcare expense in India is out of pocket. Thus, opting for medical insurance that reimburses the cost of treatment supplemented with a fixed benefit critical illness plan/rider that pays a lump sum is recommended. The critical illness riders/plans offered by life insurance companies will pay a lump sum over and above your medical insurance claim.

Accidental death or disability/dismemberment riders cover specific events where the cause is an accident. Again, the benefit payable is in addition to that payable under the base plan. In the initial years of working, the savings are not adequate to meet all the liabilities.

Hence, the financial impact of any unforeseen event due to an accident can be mitigated through accidental riders/plans

Term Rider, which adds to the amount of life insurance cover and pays additional money upon death. Term rider boosts the insurance cover and allows the family of the deceased to meet the financial liabilities.

Some products have also started offering these riders as product feature or option. It serves the same purpose, and it is worth to pay a small incremental premium towards such benefits, which helps in a big way to the insured or to the nominee in case of an untoward and unforeseen event.

(The author is Chief Risk Officer/Actuary at Future Generali India Life Insurance Co Ltd)