Term Insurance

COVID-19 Term Insurance Rider and Its Benefits

By Admin
Apr 30, 2021

There could never have been a better wake up call regarding the need to maintain hygienic practices and introspect on the way one lives than the ongoing COVID-19 pandemic. The human race has not been frazzled to such an extreme level for a long time. Precaution and preparedness are the only cures to get this pandemic under the semblance of control. Apart from the medical preparedness, financial preparedness is also paramount. An important step in this direction is the introduction of the COVID-19 rider along with the term plan.

Let us understand what exactly is a COVID-19 rider, and what are the associated benefits!

Importance of having a term insurance plan during the pandemic

When it comes to financial planning, insurance is always a recommended instrument. The value of insurance is much more pronounced, however, with the subsequent global pandemic. A term insurance contract is, in particular, paramount when it comes to:

Protection: Term insurance will shield the family from financial instability to be dignified and secure with their lives.

Financial security: It serves as an assurance against unexpected incidents, such as terminal disease or premature death.

Debt cover: It is possible to use insurance to pay debts, credit dues, etc.

Tax-benefits: Under Section 80C of the Income Tax Act, 1961, you can claim up to INR 1.5 lakh annually. Also, under Section 10(10D), the final death or maturity gain is tax-exempted.

Not only is the pandemic a health emergency, but it is also a financially difficult moment. Although the repercussions of Covid-19 can vary for most patients, the cost of care can be high.

Without a ventilator, an average person hospitalized in Delhi for 14 days can pay up to INR 2 lakhs.

On the contrary, the costs are significantly higher for patients on ventilators. Therefore, on these occasions, purchasing  term  insurance is crucial.

The COVID-19 Term Insurance Rider

A rider is essentially an optional cover that a policyholder may apply to one's basic policy by paying an extra premium. The COVID-19 Rider will be applicable to policyholders seeking to defend themselves against the ongoing pandemic, beginning with an annualized premium of as low as INR 271 for an amount guaranteed of INR 1,00,000.

Benefits of the COVID-19 Rider

  • In addition to a death cover, COVID-19 Rider gives diagnostic advantages to clients. 
  • It will be open to consumers between 18 and 65 years of age. The diagnostic advantage provides a fixed lump sum amount (20 percent of the guaranteed rider sum) that will provide the family with financial security. 
  • If the insured succumbs to COVID-19 under the death cover, the rider will provide the nominee with a lump sum (100 percent of the rider amount assured) along with the diagnostic value of an additional 20 percent of the rider amount assured if not already available.
  • In addition, over and above the standard program benefits, the benefits under the rider would be payable. 
  • People need to protect themselves and their dependents from financial problems caused by diagnosis or untimely death due to the coronavirus generated by the current pandemic.  The 
  • COVID-19 rider aims to help consumers secure their financial future by encouraging them to continue investing in life goals by adding the one-year rider to their base plan while still preserving their immediate future.

Commenting on the launch of the COVID-19 Rider, V Viswanand, Max Life Insurance Deputy Managing Director, said “The ongoing pandemic had caused numerous financial disruptions in our lives. While the pandemic will end in the near future, beyond it, life goes on. Through the launch of our COVID-19 rider we want to partner with customers in helping them tide over immediate COVID-19 related financial worries to build a secure future for themselves and their loved ones. The rider aims to protect customers over the period of a year as an attachment to a base plan of their choice ranging from term plans, to savings plans, thereby enabling them to protect their present, while planning for a brighter future."(source: livemint)

The rider seeks to protect consumers over a year as an attachment to their option of base plan, ranging from term plans to investment plans, helping them protect their current while preparing for a brighter future.

What is the process of buying a COVID-19 rider?

Buying an insurance plan or any of the riders can be very confusing. It is a cumbersome task to choose between so many plans, but here are some quick pointers to help you through the process -

1. It is important to choose an insurer with a high CSR - A life insurance company's CSR or Premium Payment ratio or premiums paid ratio represents the number of claims settled over those collected in a year. IRDAI (Insurance Regulatory and Development Authority India), which can be found online, publishes the list of CSRs of various insurers every year. Checking the CSR will let you know about an insurer's claim settlement process, being an interested COVID 19 rider buyer. A reliably high CSR over a few years often ensures that getting coverage under COVID 19 protection or rider cover provided by your insurer would be better for you and your loved ones.

2. Be very careful about the amount of sum assured you select - You should know during the current COVID 19 period that death is not the only event you need a protective life cover for. It can also cause financial worries for you to get the required treatment after contracting COVID 19 disease. This is why you should also add to your financial planning checklist the purchase of COVID 19 rider. In addition, checking the exclusive benefits of the COVID 19 rider and selecting them according to your needs is crucial. The premiums payable for this rider are easily affordable, making it easier for you, without burdening your pocket, to get financial protection against COVID 19.

3. Do not delay - In addition to practicing social distancing and hygiene maintenance, you must also remain protected with COVID 19 rider. The outbreak of COVID 19 disease has been in the news for a long time. You never know where you can get this virus from, making you sick and eligible to receive treatment. In the form of hospitalization/treatment cost coverage, along with additional death benefits, the purchase of COVID 19 rider will benefit you.   

General exclusions to the COVID-19 rider

Although the terms and conditions for the COVID-19 insurance rider may vary from one company to another, here are some general exclusions that the policyholders should be aware of. The insurance companies may not be liable to pay any sum under the following circumstances:

  • For Hospitalization Benefit, if the claim relates to any disease, sickness, or illness other than COVID-19 or COVID-19 SARS-2-COV
  • If the insured recovers and is negatively tested for COVID-19 or SARS-COV-2, and dies because of another morbidity afterward
  • If any claim is contracted or manifested with respect to COVID-19 or SARS-COV-2, or the onset of the disease, this rider policy is prior to the risk initiation date;
  • In the event of any confirmed positive diagnosis, or in the event of death due to COVID-19 or SARS-COV-2 during the course of the diagnosis, waiting period as defined by this policy of the rider;
  • If the insured travels outside India during the term of this rider policy, no claim will be paid. For the travel period outside India and for the waiting period after the travel period;
  • Self-quarantine or home quarantine advised by any unauthorised center is not covered
  • In case of sudden death.

 Summary

Pandemic is a trying time. No amount of precaution can be termed enough to say that COVID-19 is not a possibility and along with COVID-19 come all the associated expenses. In such an extreme and unprecedented scenario, we all require extreme and unprecedented measures. Hence, the need for a COVID-19 rider along with your term plan.

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