What are Riders and How They Enhance Your ULIP Options

Who doesn’t like additional benefits? Whenever we go shopping, we constantly look for offers and add-ons.  Anything that we get over and above the promised services elates us and makes us feel content with the value for money.

Unit-Linked Insurance Plans (ULIPs) are no different. If you have the query in mind that “why should I invest in ULIPs”, the answer is to reap comprehensive financial benefits and avail of a life insurance coverage. ULIPs area magical product with twin benefits of life insurance and market-linked investments.  ULIPs, also offer add-ons called ‘riders’. Riders are extra benefits, which you can choose alongside your current life insurance policy at reasonable rates. Riders are additions, which help you to derive more value from ULIPs. Therefore, when you choose the best ULIP plan for yourself, be sure to check the riders well.

What are riders?

Riders are extra benefits associated with the insurance policy that you or your nominee can avail of in case the specified eventuality occurs. These benefits are optional and in addition to the standardized terms of the policy. Riders that you can choose in case of one ULIP may be different from another ULIP offered by another insurance provider. Some of the crucial riders offered by the insurance companies are accidental death riders, critical illness riders, term rider, critical illness rider-women, and waiver of premium rider. There are various other secondary riders as well, which are offered by the insurance companies. However, you need to be careful to only add riders that are relevant to you and not those which come at low costs. Given below is a list of riders you can add on to your ULIP plan:

  1. Premium waiver rider

You are aware that in the event of non-payment of premium, your policy can lapse. However, there is a rider that can prevent this from happening. The premium waiver rider is an additional feature that can keep the policy from lapsing or ending. If you miss paying your premium due to financial constraints, this rider prevents the lapsing of the policy and allows you to continue enjoying the benefits of the insurance-cum-investment policy.

2. Rider for critical illness 

A critical illness or disability can dislodge you from active employment.  This rider serves as a replacement to earn regular income in case you are diagnosed with a critical illness such as paralysis, stroke, cancer, heart disease, or a transplant/replacement of a critical organ. This rider also takes the responsibility of paying for mounting medical expenses during this period. There are insurers who also have special provisions for critical illness riders for women. Additionally, there are ULIP providers, who offer a mix of premium waiver and critical illness cover. If you are diagnosed with an illness that comes under the ambit of the cover, your premium will be waived off but the benefits of the insurance policy will continue to stay.

3. Rider for accidental death

Unforeseen occurrences such as an accident can hamper your financial situation. While most of the life insurance policies have standard coverage for accidental death, a specific rider for death due to accident increases the sum assured that you would otherwise receive from the insurance company, in case there is an accidental death as compared to death caused by other circumstances.

4. Rider for accident disability

If you face disability due to accident specifically and lose your means of livelihood, this rider empowers you to earn a regular income for a stipulated period. This rider covers both total and partial disability. Various ULIP providers can have different kinds of accident disability rider.Therefore, it is important to thoroughly read the terms pertaining to these. Usually, these riders offer a payment of 1% of the sum assured, on a monthly basis, for a fixed period of 10 years.

5. Rider for guaranteed insurance

Many times, insurance companies do not offer coverage for people beyond a definite age group. This is especially true in the case of senior citizens, who have a medical history of varied illnesses or surgeries. The guaranteed insurance rider allows you to buy an insurable guarantee, which increases the life insurance and provides insurance for sunset years of life. You do not even need to go through the usual medical tests to opt for this rider.

6. Income benefit rider 

If you are the sole earning member in your family, this policy is ideal for you. With the help of an income benefit rider,your dependents not only receive the sum assured amount but also a regular payment on a monthly or quarterly basis, in case of your premature demise. This payment is for a period of five-ten years.

Benefits of riders

Riders are one of the best ways to enhance the value of a ULIP policy without having to buy a separate policy. The riders benefit the policy holders in a number of ways:

  1. Additional coverage

A rider when purchased along with the standard insurance policy provides an additional coverage. This makes the life insurance policy a holistic one. For example, a critical illness cover pays a lump sum amount that can be used for so many other purposes such as household expenses, EMIs for a loan, or any other financial commitments.

2. Easy on pocket

Purchasing a rider on ULIP is quite affordable as opposed to buying a separate policy for every need. There is a wide variety of rider options to choose from. Hence, you can select the one according to your specific need.

3. Hassle-free

Buying an insurance policy involves a lot of documentation and formalities. Instead of taking a new policy and undertaking the process all over again, it is better to take on a rider policy as per individual requirements.

4. Tax benefits

Just like the premiums for the standard life insurance policy, even a rider enjoys tax benefits. So, even the tax liabilities are taken care of. Therefore, considering the aforementioned points, you may avail of a rider as per your needs and preference

Author: Guest author

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