With an ever-increasing income affecting the standards of living, life insurance today should be undoubtedly a vital part of people’s financial planning. Life insurance lets you go that extra mile in life by helping you cover for your expenses at crucial stages of your life. So, it becomes very important that you cover your life with a term insurance plan.
For instance, you can always go for term plans that will provide you with life coverage at an affordable cost. However sometimes, buying only a life insurance policy may not serve the purpose. For this reason, there are additional benefits that come along with life insurance plans, called as riders.
What riders are?
Riders are add-on benefits that will help you enhance the coverage of your term plans. These enhancements can include things such as increasing the limit of the insurance coverage and requires very nominal additional premium because of its rather low underwriting.
The conditions, terms and rates of premiums for riders are different from one insurance company to the other. The rider calls for termination once its benefits are claimed by the policyholder. However, the original insurance policy goes on providing you with life coverage.
Life and term insurance plans and its objectives
One of the basic objectives of life and term insurance such as max Life term plan is to provide expense coverage as well as financial security to the family of the insured, in case he or she passes away. So, it acts as a protection for risk involving the death of the family’s breadwinner. That is, if the breadwinner is not covered by life or term insurance, then he could be putting his family’s financial security in jeopardy if an insurance policy does not cover him.
Coverage from life insurance plans can be used for various reasons including monthly household expenses, funding your children’s education, paying off any debts or loans, building retirement funds and building a solid corpus for your child’s future among others.
Common life and term insurance riders
Riders provide benefits in addition to the ones already offered by the life insurance policies and can be bought as an add-on to the existing policies. The rider options enable the policyholders to either increase or restrict the coverage the policy provides. With that said, here are some common life and term insurance riders that you can buy right now.
- Guaranteed insurance with Renewal Provision Rider or Guaranteed Insurability Rider
The Renewal Provision Rider or Guaranteed Insurability Rider is a kind of life insurance rider that allows for the insured person to buy extra life insurance with little or no underwriting. Guaranteed insurability is a special type of rider as it allows for the insured person to enhance their death benefits without having to provide any proof of insurability.
In general, death benefits can be added to the Guaranteed Insurability Rider at ages of the insured person, which would be pre-determined. This could be at certain milestones of the insured person’s life such as marriage, childbirth or even marriage of their children. However, there are certain limits which the policyholder cannot cross while adding these additional benefits to his or her existing insurance plans.
- Worry less about your family with Double Indemnity or Accidental Death Rider
An amount is paid in addition to the Death Benefit to the insured person, as part of the rider, in case the policyholder dies due to an accident. This amount will generally be equal to the apparent worth of the policy, thus helping the policyholder to double his or her benefits. Hence, this rider stands up to its name, since it gives double the benefits. And as with any other rider, this rider comes with its own set of limitations. So, make sure you read and understand the policy terms thoroughly.
- Get rid of premiums with Premium Waiver Rider
Every term insurance offer this rider to the customers to make sure that the premiums are waived off, in case the policyholder faces permanent disability due to an accident or illness, and thus loses his regular income. This is because in case the family’s breadwinner is disabled, not only will this affect him, but also his loved ones who are dependent on him.
In such cases, the policyholder will not be required to pay the premium before recovery or before one has regained the ability to earn their regular income again. This helps especially if the premium of the policy is high. However, the way the term ‘permanent disability’ is defined varies from one insurance company to the other. So, make sure you get it right before signing on the final documents.
- Get more income for the family with Benefit Rider
Death of the policyholder or the insured person can be devastating for the family. So, this rider ensures that the family’s regular income is not disrupted. But one thing you should keep in mind when you decide to buy this rider is how many years you want your family to get this income.
- Get any critical illness treated with this
In any case that the insured person faces a major illness that could considerably reduce the number of years they are going to live; the policyholder can opt for this rider which will ensure 25-40% advance amount of Death Benefit. But insurance companies tend to reduce the amount received in addition to any interests, from the beneficiaries you name when the time comes to receive the sum.
- Give your children the best in life with the help of this rider
The rider is meant it provides with death benefits to all those children who die before an age the rider specifies. Also, as the child matures, this rider lets the term insurance be converted to permanent and covers five times the original term plan.
- This rider lets you take care of your health in the long-run
In the cases where a policyholder is hospitalized he must be nursed or cared for. This rider deems to be beneficial as it provides the insured with a monthly sum of income. But Long-Term Care insurances are also available. Nonetheless, many companies also offer riders that help you cover costs in the long-run.
- Get assured premium returns with this rider
As the name suggests, this rider asks that a nominal premium is paid and then returns the full premium amount at the time of maturity. In case the insured person dies, his family will become eligible to receive that amount. However, there are many variations to this rider, and you should be careful as to comprehend the rider completely before you go off buying it.
How to increase your coverage with life and term insurance plans?
Life changes for everyone have you go through it. And so, do your needs. What you needed a few years back may not be the same as what you need now. This is one of the main reasons why life insurance exists in the first place. However, what many people can’t seem to decide is exactly when they should be buying one.
Of course, you should always keep in mind your future needs before you go off buying a life or term insurance plan. Nevertheless, here are some ways in which you can increase the potential of your life or term insurance coverage.
- Calculating your coverage needs
Calculating exactly how much coverage you need, can be tough. But one of the easiest ways you can employ for calculating the amount of life insurance coverage you need, comes in the form of online insurance calculators.
Term life insurance calculator is one such tool wherein by accounting for your final expenses such as hospital bills, funeral charges or even your marriage or your children’s marriage charges, you will be able to determine precisely how much life insurance coverage you will require.
- Reviewing those group plan options
If you’re part of your organization’s employee group life insurance plan, then there is a good chance that you will have the option to increase your coverage. Just check with the insurance policy’s administrator and find out if you can do so.
- Layering your policies
In case you don’t wish to go for the policies offered by your organization, then it’s best that you buy a policy from outside. Alternatively, you can go for both the group policy that your organization is providing you with, as well as a policy of your own from outside. Term plans can be a good investment option if you are looking for better coverage at reasonable pricing. This combination of policies sometimes paves the way for you to get that surplus amount of coverage that you may require.
- Buying a second policy
You may already have a life or term insurance policy. But it may not be that big of a deal to get another one. Just try and talk to your insurance agent or company, and see if they can help you with getting you another policy. After all, two policies are better than one. You can as well buy the second policy in combination with the first as a few companies may have that option open.
In the end, always remember to understand the terms and conditions of the life and term insurance policies thoroughly before you buy them. While most policies don’t give you the option to modify them to make them befit your needs, there are other ways in which you can do that. Opting for riders is one of them. Riders let you employ your control over the policy. So, make sure you know about them by asking your insurance company, or whoever it is that is providing you the life and term insurance policy.