Life insurance riders 101: A quick guide to making a better decision

By AAN team | 14 Oct 2021

Purchasing life insurance riders can be tricky. Max Life Insurance deputy managing director V.Viswanand looks at a few common riders and explains the benefits they provide.

Riders are the add-on components of a life insurance policy that help maximise the policy benefits and coverage. They offer a potent add-on risk cover that provides additional event-based financial protection and can be used to customise your insurance plan based on specific needs.

Riders aim to provide enhanced financial support, protection during unexpected circumstances, particularly in situations involving accidents, disabilities and critical illnesses. Many also offer various other cost-effective benefits, ensuring a complete protection cover for the insured and the family.

Here is a look at the top five types of riders and their advantages:

Waiver of premium rider

Such riders ensure that the premiums of the insurance policy are waived off in case of an any unexpected/unfortunate event. This includes dismemberment, disability, critical illness, accident, disease, death and other causes. Apart from this, the policyholder’s family will continue to receive the basic policy benefits including bonuses and guaranteed income streams based on the type of policy purchased.

Accidental death & dismemberment rider

Accidents can create a significant dent in the family’s finances and disrupt future goals. In the event of accidental death or accidental dismemberment, such riders would safeguard one’s financial future. There are additional protection benefits that are attached to the policy that are activated when the insured meets an accident, leading to death or dismemberment.

Critical illness rider

This rider provides the policyholder with financial protection against a range of critical illnesses post finishing a ‘waiting period’. In case of diagnosis of the covered critical illnesses (like cancer, heart attack of specific severity), the insurance company will pay a fixed benefit to the life insured and their family. The list of critical illnesses covered and the minimum survival period are mentioned under the rider’s terms and conditions. This helps to cushion the financial impact for the family by minimising the financial risk of battling a serious disease.

Disability rider

Disability riders offer an advantage are when an individual suffers from a partial, total or permanent disability because of an accident or any other cause. An incident resulting in a disability can cause long-term impact on the income generating capability of the individual, and with this rider the individual and the family are provided a lump sum benefit or an income benefit.

Term rider

Term rider allows the policyholder to add-on an additional layer of risk coverage on the overall base insurance policy. As an add-on, the customer can choose to enhance the risk coverage for a specific period or throughout the coverage term of the base policy.

Rider coverage is not one-size-fits-all

With many types of life insurance policies to choose from, it is important to find one that caters to your financial needs. In the same way, rider coverage also needs to be assessed and tailored to the needs of the policyholder. Keep the following in mind when choosing the right insurance rider:

All your risks should be covered, purchasing a rider means you are investing in additional coverage
Read the terms and conditions, this is how you will understand the benefits, exclusions and eligibility criteria of the policy
Align the rider coverage to your life insurance plan. Make sure that your rider does not include what the insurance policy is already offering, there is no additional benefit for duplicating the coverage
Ensure the eligibility criteria is met before opting for a rider, this includes age, medical history, lifestyle habits etc.
When in doubt, reach out and consult with your insurance agent or life insurer, which can help you arrive at the right decision

In todays’ challenging times, the value of health and financial protection has increased tremendously. This means that you must always prepare for the future and secure your family for the good or the bad times to come. Therefore, as an informed policyholder, ensure you build a full-proof financial plan covering all eventualities.

V.Viswanand

An industry veteran in the financial services sector for nearly three decades, V. Viswanand is deputy managing director at Max Life Insurance and a member of the board.

Under his belt, he is responsible for distribution, including proprietary channels, bancassurance and third-party business, institutional sales, business development and distribution operations.

He steers the strategic direction and growth of the company and leads the Max Skill First training partnership as well as the procurement and facilities functions.

He played an instrumental role in not only propelling the company to emerge as the industry leader in customer retention, claims paid ratio and customer loyalty but also had led the company’s wins in several global and national accolades in quality and technology, including the coveted gold medal at ASQ, USA and RBNQA.