Santosh Agarwal – PolicyBazaar | Dec 08, 2016,12.35 IST | Source: Moneycontrol.com
Did your insurance agent discourage you from buying a term life insurance plan just because you will get no benefit unless you die? If you trust him blindly, you will only help him earn a better commission, by going over budget for a plan that may not cover you sufficiently. The agent was right when he said that a term plan offers the sum assured only if the policyholder dies during the policy tenure. But, what he may not have pointed out to you is:
1. Insurance plans that offer benefits on maturity are more expensive than term plans.
2. By opting for a TROP (Term with Return Of Premium) plan, you can get back all the premiums you paid, on the maturity of the policy.
3. By purchasing add-ons or riders, you can enhance the protection offered by your term plan.
Riders are purchased additionally with a basic life insurance plan for getting additional benefits. Term plans are the simplest and the most cost-effective life insurance plans. But a term plan alone may not be sufficient in certain cases. For instance, if you get severely injured in an accident, or get diagnosed with a life-threatening disease, a term plan will not help you bear the major expenses of your prolonged treatment. In such cases, the add-ons come in handy. When you buy a life insurance plan, the available riders may vary with the insurance provider and the policy.
Here, we will discuss the three most important add-ons that you must have with your basic term insurance plan.
1) Accidental disability rider
Accidents are unfortunate and unpredictable. An accident may leave you disabled for life. If you have dependents in your family, they will be in a crisis to manage their living and paying for your treatment simultaneously while you are not earning. Such unfortunate instances are covered by accidental disability rider. If you suffer from disability due to an accident, the rider will offer the sum assured by which your family will be able to maintain a livelihood and bear the cost of your treatments as well.
Cost estimates: If you are a 30-year-old, opting for a base cover of Rs. 1 crore over a 35-year time period, an accidental disability rider will cost you around Rs. 300 to Rs. 500 annually for a cover of Rs 10-30 lakh.
2) Critical illness rider
Today’s fast-pacing life is taking a toll on our health. Consequently, several life-threatening diseases are on the rise. The diseases like cancer, stroke, organ failure call for prolonged treatments that can be quite expensive. Critical illness riders ease off the burden of expensive medical treatments by offering a lump sum assured to the policyholder in case he is diagnosed with any of the medical conditions pre-specified under the plan. However, pre-existing medical conditions will not be covered by this rider.
Cost estimates: If you are a 30-year-old, opting for a base cover of Rs. 1 crore over a 35-year time period, a critical illness rider will cost you around Rs. 5,000 to Rs 10,000 annually for a cover of Rs 25-50 lakh.
3) Waiver of premium rider
When you buy a term plan, you get into a contract of paying on a regular basis for a certain period of time (unless it is a single pay plan). But what will happen if you are unable to work due to some unfortunate accident in your life? How are you going to pay for the rest of the policy term if you are left disabled by the accident and there is no other earning member in your family? The waiver of premium rider comes with the solution. In case you are unable to pay your premiums due to some disability or diseases leading to the loss of your job, all your future premiums will be waived off. You will no longer have to pay the premiums but your basic term plan will still continue till the date of maturity. Typically, this rider comes included as part of a term cover, however if that’s not the case, it’s recommended to opt for this must have rider.
Cost estimates: If you are a 30-year-old, opting for a base cover of Rs. 1 crore over a 35-year time period, the waiver of premium rider will cost you around Rs. 400 to Rs 600 annually.
The cost of a rider may vary from one insurance provider to another. Both expensive and low-cost riders are available and they also depend on the base sum assured. However, riders are, undoubtedly, the most important tools to strengthen your basic term insurance cover. Riders come in handy in certain eventualities in life. So, if you want comprehensive life coverage for you and your family, a term plan with the three riders mentioned above are worth considering.