A Detailed Guide on How Do Term Insurance Riders Work


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Term insurance supports a family financially in case of an unfortunate death of the key earning member. Are you aware of the riders available with term plans? Let’s find out.

Before talking about the Term Insurance Riders, let us first understand the meaning of Term insurance. Term Insurance is a kind of life insurance which pays the nominee or family of the insured person benefits in terms of money after the death of the policyholder.

Term insurance serves as one of the best ways to secure the lives of your loved ones. The benefits of term insurance can also be availed by means of several riders that can be bought along with the policies. You can pay a little extra premium to avail the most suitable riders that could further boost the strength of your policy. This way, you can make sure that your family could deal with different scenarios that might arise in the event of your unfortunate death. You can choose the riders as per your budget so that you could easily pay the premiums on yearly basis.

However,  to choose the best rider, you must have a thorough understanding of the same. In this post we are giving you detailed information about the different term life insurance riders and the way they function.

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What are Term Insurance Riders?

Term insurance riders are additional covers or add-ons that are offered along with term insurance policies to enhance their coverage.

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Types of Riders in Insurance: 5 Popular Term Insurance Riders

Below are some of the best term insurance riders or add-ons that you can avail with your plan:

1.Accidental death benefit riderUnder the accidental death benefit rider,  the nominee of the policyholder receives an extra amount of sum insured if the policyholder dies due to an accident. Without this rider, the nominee is entitled to receive only the base amount of sum assured even if the insured person dies in an accident. However, if the insured buys this rider along with his/her term insurance policy, they can guarantee that their nominee receives an additional sum as accident benefit along with the base amount.

Hence, this life insurance policy rider covers the family of the insured with extra financial aid in the event of an accidental death of the policyholder.

For instance, a policyholder buys a term plan of 1Crore as sum insured. He/she further buys an accidental rider of 50 Lakh. In this case, if the policyholder dies in an accident, his/her family will get  INR 1 Crore and INR 50 Lakh from the insurer. However, if he/she dies due to any other circumstance, the family will get the benefit of 1 Crore sum insured and not the 50 Lakh accidental rider benefit.

2.Accidental Disability benefit rider – Under the disability benefit rider, the policyholder receives financial support from the insurer by procuring this add-on along with their term plan at the time of buying the policy. Thus, this life insurance with disability rider helps the insured person in the event of an accident that cripples the person with temporary or permanent dysfunction. So, here the insurer will pay the insured regularly for the next 5 or 10 years depending on the sum assured percentage of the policy.

For instance, due to an accident or any other mishap if the policyholder becomes incapable to work, the insurance company will pay 10% of the sum insured annually for 10 years. This money can be used by the insured as a source of income coming regularly to aid the insured and his/her family.

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3.Critical illness benefit rider – Under this life insurance rider, the policyholder is entitled to receive a lump sum amount of money if he/she is diagnosed with a  critical illness which is specified in the terms of the policy. Some of the major critical illnesses covered under critical illness riders include, cancer, renal failure, stroke, heart attack, and paralysis among others.

Hence, if the insured is diagnosed with a major illness, the insurer will pay the sum insured as a lump sum amount. However, in this case, the term plan can either get cancelled or may be continued depending on the policy clause. It is important to read through the clause of the policy of critical illness rider in life insurance carefully to ensure that it benefits you as per your needs.

4.Premium waiver rider – This waiver of premium rider life insurance confirms that a term plan doesn’t get canceled even if the insured is unable to make the payment of the future premiums. This rider can be availed in case the insured faces any income loss or if the person is unable to make payment of the premium due to any other reason. If such a scenario is faced by the insured, he/she can seek a waiver of premiums for future payments. However, the best part is that the plan still functions as usual.

Hence, by availing this rider you can make sure that all the premiums are waived off until the policy comes to an end.  On the contrary, without this rider you may not be able to continue with your policy if you cannot make the premium payments on time.

5.Income Benefit rider – Under this life insurance rider, the nominee of the insured receives an additional income annually for 5 to 10 years along with the compulsory sum insured.  This rider is a part of many types of insurance plans and it aids the family of the insured with additional money for several years after the insured is gone forever. For instance, the nominee of the policyholder might get 10% of the sum insured as a regular income for the next 5 or 10 years depending on the terms of the policy.

Read More: Reasons to Add Riders to Your Term Insurance Policy

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You have learned about some of the best life insurance riders and their benefits as mentioned above.  However, it is essential to completely understand the features of the riders and the benefits that they offer before buying them.

Thus, we hope that the information above will benefit you as an insurance seeker to gain an understanding and make intelligent decisions while including such riders to your term plan.

Further, there are other riders available including the life insurance long term health care rider, and single premium life insurance with long term care rider which can also be availed for additional benefits.

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FAQs on How Do Term Insurance Riders Work

What are term insurance riders?

Term insurance riders are additional features that can be added to a term life insurance policy, providing additional coverage beyond the basic death benefit. These riders can be added to the policy for an additional premium.

What types of riders are available for term life insurance policies?

There are several types of riders that can be added to a term life insurance policy, including accidental death benefit riders, critical illness riders, disability income riders, and waiver of premium riders. These riders can provide additional coverage for unexpected events or help pay for living expenses in case of illness or disability.

How do term insurance riders work?

Term insurance riders work by adding additional coverage to a basic term life insurance policy. For example, an accidental death benefit rider would provide an additional payout to the beneficiary if the policyholder died due to an accident. A critical illness rider would pay out a lump sum or ongoing payments if the policyholder was diagnosed with a serious illness covered by the rider. A waiver of premium rider would waive the policy premiums if the policyholder became disabled and unable to work. The cost of these riders is typically added to the policy premium and can vary depending on the type and amount of coverage provided.

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Aug 06, 2022
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PayBima is an Indian insurance aggregator on a mission to make insurance simple for people. PayBima is the Digital arm of the already established and trusted Mahindra Insurance Brokers Ltd., a reputed name in the insurance broking industry with 17 years of experience. PayBima promises you the easy-to-access online platform to buy insurance policies, and also extend their unrelented assistance with all your policy related queries and services.

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