Add an extra feature to your policy by opting for a ‘Rider’

Riders are useful optional add-ons that give your policy an extra edge. ‘Riders’ in a financial context actually means an optional insurance linked benefit, purchased separately at an additional premium.

An Insurance expert (IA) overheard two young men, A & B, in a café. The conversation is as pictured below.

A - What are Riders in Insurance?

IA - ‘Riders’ in a financial context actually means an optional insurance linked benefit, purchased separately at an additional premium. Riders help the insured customize the policy to fit his or her specific needs.

B- What are the different types of riders?

IA - There are several types of riders and they differ from company to company and policy to policy.Here is an indicativelist of riders:

• Accidental Death/Permanent Disability Benefit Rider: In addition to the core death benefit that a policy offers, one can opt for an additional cover payable in case the death or permanent disability is due to an accident. Such a rider may provide benefits such as payment of periodical benefits, waiver of premiums, etc.

• Critical Illness Rider: This rider provides an additional benefit of periodical payments or lump sum payments in case the insured is even diagnosed (not treated) with any of the critical illness mentioned in the life insurance agreement. Generally, illnesses like kidney failure, heart attack, stroke, some types of cancers, etc. are listed as critical illnesses.

• Guaranteed Insurability Rider: This rider is a tool to increase the coverage limit as per the policy terms and conditions without any medical examination and irrespective of the health condition of the insured at that time. This rider is suitable for a young earning person who can exercise this option when his income and/or liability increase in the future.

• Term Rider: This rider promises an extra amount, generally same as the sum assured, on the death of the insured.

• Waiver of Premium Rider: This rider is characterized by waiver of premiums in case of death or disability. It is commonly available with child plans.

• Spouse Insurance Rider: This rider provides insurance coverage for the spouse of the insured in the same policy.

• Surgical Assistance Benefit: This rider provides financial assistance in case of medical emergencies leading to surgery.

B - Can I add or discontinue a rider any time within the policy tenure?

IA - Generally, riders have to be selected at the time of buying the policy. However, certain insurers do allow addition of riders at a later date. Opting out of the rider depends on the terms and conditions of the rider.

A - Is there any limit on the coverage amount, premium and number of riders I can opt for?

IA - Generally, there is no limit but the premium of health related rider cannot be more than 100% of premium amount of basic policy. In addition, all other riders put together shall be subject to a ceiling of 30% of the premium of the basic policy. The benefits arising from each of the riders should not exceed the sum assured under the basic policy.

One can select a rider based on the perceived risks and needs from the insurance policy. The benefits offered may be different from each insurer and may vary from rider to rider.