A term insurance plan is primarily meant to protect a family from financial risks arising out of a sudden or untimely death of a loved one, especially the breadwinner.
Simply put, in case of an unfortunate event, the payout from the insurance policy would act as a source of income to cover the family’s recurring as well as non-recurring expenses and help them maintain their existing lifestyle.
However, there are many other uncertainties in life such as a disability due to an accident or a critical illness that may put one’s family in a similar financial distress where a regular term insurance plan may not be of much help.
The Indian Council of Medical Research (ICMR) has forecasted approximately 17.3 lakh new cases of cancer in India in 2020[AIIMS.edu cancer statistics]. Out of those, around half are expected to survive with proper treatment.
The cases of heart diseases are also rising in the country and its prevalence, along with stroke, has increased by over 50 per cent between 1990 and 2016[Lancet Global health Journals - The changing patterns of cardiovascular diseases and their risk factors in the states of India].
In such situations, simply having a term insurance plan may not be enough. To protect your loved ones from financial hurdles arising out of such risks, one can opt for additional riders along with the term insurance plan.
Let’s explore as to why a rider with your term insurance plan is the need of the hour!
Why Term Insurance Riders Matter?
Rajesh Mantri, a SME entrepreneur, had taken a life cover of Rs. 1 Cr and approximately a year later, he was diagnosed with cancer. Not only he had to suspend his business activities for several months due to his treatment, he had to bear the significantly high costs of surgery and post-surgery care. Moreover, he had to travel frequently from Kolkata to Mumbai for his treatment, which incurred additional costs.
Since Rajesh is the only working member in the family, his wife and son had to face severe financial problems during this period even to run the household. Had Rajesh opted for a critical illness rider benefit at a nominal extra cost along with his term life insurance, the expenses of his treatment would have been taken care of and his family could have focused all their energy and attention on taking care of him rather than worry about cost of treatment and other expenses.
Which Riders Should You Avail?
While different insurers provide different rider options with their insurance plans, the baseline features are common among most of them. Here is a list of riders that can be availed based on your needs:
Accidental Death Benefit Rider: As the name suggests, this provides an additional sum (over and above the base policy) assured to the nominee if the life assured loses his or her life due to an accident.
For example, if the policyholder opted for a basic sum assured of Rs 1 Cr. and opted for an accidental death benefit rider of Rs 25 lakh, the total claim amount will be Rs 1.25 Cr. if the death occurs due to an accident.
Accidental Permanent Total / Partial Disability Benefit Rider: Accidents may not always lead to death but may leave the life assured totally or partially disabled thereby, limiting their capability and capacity to earn their livelihood. This rider, when added to the base policy, can provide immediate financial aid that can help cover the medical expenses as well.
Critical Illness Benefit Rider: This rider offers protection against major critical illnesses and pays out a lump sum amount if the life assured is diagnosed with any of the listed critical illnesses in the policy.
The listed critical illnesses usually include heart and artery diseases, major organ transplant, stroke and cancer, among others. By opting for this rider, one can get the healthcare they need without worrying about expenses, while also ensuring that their loved ones continue to have their life goals met.
Waiver of Premium Benefit Rider: With this additional rider, all future premium payments payable under the life insurance policy are waived if the policyholder can no longer make them due to contingent events like critical illness or permanent total disability due to an accident subject to conditions specified under the rider.
In such a scenario, the policyholder or his/her family do not need to pay any more premiums to continue the policy. The insurance company pays all future premiums on their behalf until the end of the policy term.
One must opt for this rider if his/her dependents are not earning members of the family because in case of an unfortunate event, they may not be able to pay future premiums if the policyholder is no more.
This can result in policy lapse leading to more financial hurdles. The very purpose of buying a term insurance policy would be defeated in such a case. Not all products provide for this rider hence it is always better to check details and make a choice accordingly.
Family Income Benefit Rider: Under this rider, the policyholder’s family receives one per cent of the rider sum assured every month if the insured individual passes away, meets with accidental permanent total disability, or is first diagnosed with any of the listed critical illnesses. This implies a regular monthly income for the family so that they can continue to have a worry-free life and keep their life goals on track. This monthly income is assured for a fixed period, usually for 10 years.
Adding riders to the base term insurance policy protects you and your family from the financial stress against a range of uncertain events. A wide range of scenarios gets covered under each rider and each of them serves a particular purpose. Some insurers like Bajaj Allianz Life Insurance offer all these rider options, which the policyholder can choose to, add to his / her base term insurance policy.
Choosing your insurer is as important as choosing the riders that you want to add to your term insurance plan. One critical factor that comes to mind when evaluating different insurers is the “Claim Settlement Ratio (CSR)”. This ratio indicates the percentage of claims the insurer has honoured against the total claims registered / received. With a bouquet of innovative term insurance plans in India to suit the varied needs of policyholders, Bajaj Allianz Life Insurance has a Claim Settlement Ratio of 98.02 per cent [Individual claim settlement ratio FY 19-20] for FY19-20 and have had a claim settlement ratio of over 90 per cent in the last five financial years. ,!
Not only that, you can also get a 1 Day Claim approval with Bajaj Allianz Life [87% of non-investigative individual claims approved in one working day for FY 2019-20. 1 day is counted from date of intimation of claim before 3 PM on a working day (excluding Non-NAV days for ULIP) at Bajaj Allianz Life offices]. Thus, the financial stability and security of your loved ones is assured in case life takes an untoward turn.
We all know life is uncertain. While we may never be able to remove this uncertainty, we can protect our loved ones from the risks arising out of the same. So, don’t wait, opt for riders along with a term insurance today and give your family the protection it needs!