When you invest in a policy, you support getting financial coverage and benefits. General insurance policies such as a vehicle or health insurance provide financial assistance in an accident involving your car or if you get hospitalized. However, life insurance policies offer financial aid from life risks. They are not designed to provide financial coverage for objects or other situations. That being said, there is one way you can enhance your policy for additional coverage apart from the basic range it provides. This can be done by including riders in your policy. So, what exactly are riders? And which riders would be more suitable for your approach? Read more to find out.
What is an endowment policy?
This policy is a type of life insurance policy in which you get to enjoy the dual benefits of investment and insurance. In the investment part, you get good returns when investing in a selected fund. These returns enhance your maturity benefit. In the insurance part, your dependents are provided a life cover from life risks in your absence. If you were to pass away during the policy term, your family would receive a death benefit from the insurer. This amount can help them manage the necessary expenses. They would also receive the maturity benefit once the policy term ends.
What are riders?
Like any other policy, an endowment policy also includes riders or add-ons. These add-ons enhance the coverage provided by the policy. The main objective of these riders is to provide financial assistance to the policyholder in specific situations. Although these add-ons improve coverage, they also impact the policy’s premium. Thus, the more riders you select, the higher will be the premium.
Which riders should you consider?
The following riders can help in enhancing your policy’s coverage:
1. Disability rider
If the policyholder suffers partial or total disability in the event of an accident, having this add-on in the policy can be beneficial. When this rider is included in the procedure, the insurer pays the insured a certain amount based on a percentage of the policy’s sum. The rate of this payment differs from insurer to insurer. This rider helps the insured to have a source of income during their disability. Make sure to familiarise yourself with when this rider comes into effect per your policy terms.
2. Accidental death rider
The accidental death benefit rider could be helpful if the policyholder were to pass away during or after an accident. This rider ensures that the policyholder’s beneficiaries are paid an extra sum in addition to the existing amount. Do keep in mind that death caused only due to accidents is covered under this rider. If the policyholder dies due to suicide or self-inflicted injuries, the rider might not work in such situations.
3. Critical illness rider
This rider provides financial assistance to the policyholder if they suffer from a critical illness. While the list of acute conditions may vary among insurance companies, the common diseases covered are cancer, heart problems, paralysis, kidney problems, and more. Once the policyholder is successfully diagnosed with a critical condition, they will receive a payment, mostly a lump sum, from the insurer with the help of this rider.
4. Premium waiver rider
If the policyholder suffers a disability or an illness that prevents them from working, they might not be able to pay the premium for the policy. The premium waiver rider in your policy can be useful in such a situation. This add-on rider waives off the remaining premium payments till the end of the policy tenure. Further, it ensures that the policy remains active without paying any premium. These are the riders that you should consider including in your policy coverage. If you plan to buy this policy, use the online life insurance calculator. This calculator will show you how much the procedure would cost for these riders.
