Life Insurance

What is Term Rider in Life insurance?

Nov 15, 2021

These days, we find many interesting life insurance products. Among them, is the term rider in life insurance. This is nothing but an add-on cover available with various life insurance plans that gives the opportunity for you to have an added life cover. If you die within the policy period, your beneficiaries will receive an extra death benefit from the term rider. Take a look at this article to know more about term riders in life insurance.

Benefits of buying term rider in life insurance

What are the benefits you get when you buy the term rider along with a life insurance plan?  The benefits are:

Enhance the life cover - 


The biggest and most obvious reason for buying the term rider with your life insurance plan is to increase the scope of the cover. The term insurance rider promises to pay an added life cover if the policyholder dies before the policy ends. With expenses going up, families always benefit from getting more life insurance cover, especially if the breadwinner of the family dies in a sudden and unexpected manner. 
Pro Tip: The rider provides this opportunity to get a higher cover and that too at a low cost, so this is a very good rider indeed.

  1. Multiple payout options - 
    Like in a regular term insurance plan, under the term rider too, you can choose the payout method of the death benefit. When buying the policy, you need to state how you want your family to receive the death benefit. You can choose between the lump sum payout and the staggering payout. In the former, the entire amount will and paid in one go. In the latter, the death benefit is broken up in parts and paid over a period of time. 
    Pro Tip: Assess the needs of the family and then decide what kind of a payout you will go for.

Premiums aligned with a basic plan - 


Another benefit of the term rider is that the premiums are aligned with the basic plan’s premium. This means that you do not have to worry about making separate premium payments every time. If that were the case, you may have forgotten to pay the premium. But since it's all clubbed together, it becomes easier and more systematic to manage the premium payments for your entire life cover, along with the term rider.

  1. Can add at any time - 
    The rider does not have to be compulsorily bought at the inception of the policy only. You can have it added at any time during the policy period on renewal. 
    Pro Tip: If in a particular policy year you feel the rider is needed, you can buy it by simply informing the insurance provider about your intention of getting the term rider in life insurance.

As you can see, these benefits are indeed quite handy and allow you to get more value out of the overall life cover that you have.

Other features of the term rider

Apart from all the benefits mentioned above, the term rider in life insurance has all the regular features such as:

  1. Grace period - 
    Life in almost every other insurance plan, here too you get a grace period. If the premium is not paid on time, the base life insurance policy will lapse along with the term rider cover. You can revive it within the grace period by paying the due premium and have the coverage resumed.
     
  2. Free Look period - 
    You get a free look period of about 15 days from the time you opt for the term rider. If you feel the rider is redundant within that period, you can inform the insurance company and have it cancelled. Your money will duly be reimbursed to you.
     
  3. Surrender value - 
    There is no surrender value available if you wish to discontinue the term rider. You can simply have it cancelled, but you cannot get any money in return. However, the premium will reduce as the deductions made towards the rider will not be done any longer.

Keep these features in mind before you buy the rider to ensure there is a clear understanding of the purchase you make.

Conclusion

If you want to enhance your life cover and build up a greater set of protective measures for your family, you can surely consider getting a term rider with your life insurance plan. Most of the leading life insurance companies in India offer this feature with most of their popular life insurance policies. Speak to your insurer and see whether or not this facility is available on your policy. If yes, go for it and get many benefits at a very low cost. However, the rider will cost you an extra sum of money so ensure you need it before you buy it. Assess the needs of your family, check your budget and then make a final decision. 

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