Riders

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Definition:

Riders¹ are optional covers that help to increase the scope of coverage under the base life insurance policy. These can be bought together with a life insurance policy at a nominal extra premium to provide added protection against specified risks.

Description:

When a policyholder buys life insurance, the cover mentioned under the basic policy may not seem sufficient. Because individuals may have specific needs that are not covered in the standard policy. The protection needs can vary from person to person. So life insurance companies have a solution for this: Riders.

Riders enable a policyholder to customise the life insurance policy benefits according to their needs. This adds various types of additional covers along with a standard policy. Riders are also known as add-ons in the world of insurance. In simple words, add-ons are supplements for any insurance policy.

To avail of the benefits of a rider, the policyholder needs to have a standard life insurance policy, because these can not be bought stand-alone. Adding a rider to the policy increases the premium amount by a nominal value. There are various riders available in life insurance which are as follows:

• Surgical care rider¹:Covers hospitalisation for a required surgery
• Hospitalisation rider¹: Provides daily cash benefits for hospitalisation after mentioned diseases or injury
• Premium waiver rider¹: Waives off the future premium payments in certain risk conditions. The policyholder keeps receiving the policy benefits after a risk situation even without paying the premium.
• Accidental death and disability rider¹: Covers the risk of death in an accident or permanent disability arising from an accidental injury.
• Critical illness rider¹: Covers the risk of critical illnesses like heart attack, cancer, major organ transplant, etc.

Example:

Alok took a term plan with a policy term of 20 years, and a policy sum assured Rs.1 core. He also took the rider cover Accidental Death Benefit Rider with a sum assured Rs.50 lakhs. One unfortunate day, while driving to the office, Alok met with a deadly accident. A speeding car hit him and ran away. Alok was taken to the hospital immediately. But the doctors could not save him. On a successful claim, the term policy will pay the nominee of Alok a total of Rs.1.5 crore. Rs.1 crore will be paid per the condition specified in the based policy, and Rs.50 lakhs will be paid under the rider sum assured.

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