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Choose from these life insurance riders to improve your risk coverage
Life insurance is an integral part of financial planning. The core objective of a life insurance policy is risk protection or risk cover. You need to determine how much life insurance to buy based on your Human Life Value (HLV). It should be enough to safeguard the financial interest of your family in your absence. To achieve this, a Term Life Insurance Policy is the best option. It is cost-effective and offers optimum life coverage for the premium paid.
To calculate how much life coverage you ideally need, you could use Axis Bank’s Life Insurance Calculator. It takes into account your current age, monthly expenses, the amount of savings and investments you have, outstanding loans (if any), the amount needed to fulfil your future financial goals, and your existing life insurance coverage and helps estimate the amount of life cover you need. If you want to increase your life cover you could also consider buying riders with your life insurance plan. Let us see some life insurance riders you could look at:
(1) Accidental Death Benefit Rider: For a nominal increase in premium, you could add an Accidental Death Benefit Rider to your term life plan. In case of death due to an accident, the entire sum assured will be paid to the nominee. Say you opted for a life insurance plan with a base cover of Rs 1 crore, and the accidental death benefit rider cover is Rs 15 lakh. In case you die in an accident, your nominee will receive Rs 1.15 crore, while in case of natural death, the regular sum assured of Rs 1 crore.
(2) Critical Illness & Disability Rider: Given the high cost of medical treatment and hospitalisation, a medical emergency could impact your household finances. Besides, lifestyle-related illnesses are on the rise, given the stressful lives we lead. While a comprehensive medical insurance plan is a must, a Critical Illness Rider with your term life plan can give added protection.
- The benefit of this rider is that on diagnoses of certain critical illnesses, a lumpsm amount is paid to the life assured. If your family has a medical history of critical illnesses, or even otherwise, adding this rider for a little bit of extra cost makes sense.
- While most critical illness riders offer coverage for a wide range of critical ailments, make sure you read the list of critical ailments covered before buying it, as the list differs from insurer to insurer.
- An accident may also cause partial or permanent disability, which could result in loss of income. By opting for this rider, not only would the premium be waived off, but it may also provide you with the sum assured for the rider in a lump sum to cope up with the financial loss.
Say you have a Term Life Insurance Plan with a base cover of Rs 1 crore, and you add the Disability Rider with a cover of Rs 10 lakh. During the term of the policy, if you suffer from permanent disability due to an accident, Rs 10 lakh shall be paid to you immediately and the policy will continue with the base sum assured for the remaining term of the policy with the premium payment being waived off.
[Also Read: 5 Aspects to Consider Before Buying a Life Insurance Policy]
(3) Waiver of Premium Plus Rider: This rider offers waiver of all future premiums in case of dismemberment/ critical illness/death based on the following criteria, while your family continues to receive the policy benefits.
- If the policyholder and insured are the same, waiver of all future premiums is provided in case of dismemberment or diagnosis of specified critical illnesses.
- If the policyholder and insured are different - waiver of all future premiums is provided in case of dismemberment, diagnosis of specified critical illness or death of the policyholder.
When you add riders, always make it a point to read the terms and conditions carefully because they may vary from company to company. Axis Bank offers a wide range of life insurance plans jointly with its partners, namely, Max Life Insurance, Bajaj Life Insurance and Life Insurance Corporation of India. Make it a point to optimally insure yourself with a Term Insurance Policy and add suitable riders today.
Disclaimer: This article has been authored by PersonalFN, a Mumbai based Financial Planning and Mutual Fund research firm. Axis Bank doesn't influence any views of the author in any way. Axis Bank & PersonalFN shall not be responsible for any direct / indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information. Please consult your financial advisor before making any financial decision.
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