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In essence, a life insurance policy is created to cover and mitigate the risk of dying early by leaving a large lump sum to take care of the family. In addition, these policies act as an income replacement tool for the beneficiaries who were dependent on the policyholder financially.
However, getting a life cover is not the only thing that is uncertain in one’s life. It also makes sense to factor in various other uncertainties and risks in life that might drive the policyholder itself to need a cover. While a traditional term insurance policy may not help you cover all types of risks you can be prone to, it is the additional riders that make it the best term plan you can buy for your safety.
Make It The Best Term Plan By Choosing Different Types Of Riders
Simply put, riders are optional for any life insurance policy you buy but worth considering as they can be added for nominal value and will offer you a lot of added benefits. You can have a discussion with your family to know which of the riders suit your current and future needs the most and then take the decision of adding riders to your term insurance.
1. Accident Disability Benefit Rider
While accidents are untimely and may not always leave the policyholder completely disabled, this rider provides a claim on the term insurance policy even in the case of disability.
However, be sure to understand the full details of this rider, its temporary and permanent disability benefits, and the option of a premium waiver from your insurer as different insurers have different clauses for this type of riders.
2. Accidental Death Benefit Rider
If the policyholder dies an unfortunate death due to an accident, while their policy is still active, then this rider offers the sum assured under death benefit in addition to what is offered as the original cover to the beneficiaries of the deceased.
This is one of the most beneficial riders for a term insurance policy, and most of the policyholders often add this to their plan to add more value to their cover.
3. Critical Illness Rider
When asked ‘what is term plan’ most people often make the mistake of saying it is just a life cover for the family or beneficiaries of the deceased. However, you must not forget important riders like the critical illness rider, which provides additional coverage to the policyholder if they contract a critical illness during the policy term.
Some of the common illnesses covered by this rider are heart attack, kidney or renal failure, organ transplants, artery bypass, and paralytic stroke, to name a few.
4. Income Benefit on Accidental Disability Rider
When a policyholder is partially or completely disabled because of an unforeseen accident, then it might also hamper their earning capacity. With this rider, the policyholder gets monthly income security from the sum assured.
Typically, most of the major insurance houses offer regular monthly income to the policyholder, which is equivalent to 1% of the sum assured that is mentioned in their term insurance, for a period of 10 years.
5. Waiver of Premium Rider
If you face a partial or complete disablement in an unforeseen accident, then this rider is just the saving grace you would need. All future premiums, in this scenario, are waived off for basic policy and the rider itself till the death of the assured or term of this rider, whichever is earlier.
6. Guaranteed Insurability Option Rider
With this rider, some insurers offer policyholders a chance to enhance their life cover when they cross major milestones of life like getting married, having kids, retiring from their job, etc. The guaranteed insurability rider basically ensures your insurability to extend your cover at different stages of life without needing another medical examination.
7. Term Assurance Rider
If you add a term assurance rider to your existing policy, then it will enhance your term insurance cover at a lower cost. This rider is like a term plan and often has a cap on the sum assured that would vary from one insurance provider to another.
Another major benefit that the best term plan can offer you is the benefit of saving tax on your yearly income. Provided your yearly premium does not cross 10% of the sum assured mentioned in your policy, you can claim it as a tax deduction under section 80C of the Income Tax Act. You are allowed to save up to Rs. 1,50,000 under this section, and that is a huge benefit, especially for people who fall under higher tax brackets.
With so many amazing riders up for grabs at very nominal prices, you no longer need to worry about buying full-fledged health insurance when you already have term insurance. Be sure to check all the details of the riders and the full extent of your policy coverage before you sign that dotted line.
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Source: https://www.incometaxindia.gov.in/pages/acts/income-tax-act.aspx