An Insurance rider is policy provisions that add additional benefits to it by amending the terms and conditions of a basic insurance policy you hold.

You have to pay additional money for buying a rider which is generally very less as compared to the insurance premium as adding them to an existing policy involves very little underwriting.

Let’s understand the importance of Riders and why should you go for it.

Advantages and Merits of Insurance Riders

  1. Additional Coverage

Riders provide insured parties with additional coverage in terms of diseases, accidental benefits, as well as other benefits depending on what kind of a policy you are opting for; auto, health, life, etc.

  1. Flexibility

A rider can be referred to as an insurance endorsement and a policy can be modified according to your needs with the help of them.

In short, by adding them policyholders can customize the acquired policy for better coverage to suit their requirements as specific needs may not be covered by a standard insurance policy.

  1. Add More Value

Riders offered by Insurance Companies are designed to add more value and ROI on existing terms and conditions of a policy by which it has to abide.

Supplemental insurance riders are used to customize policies by adding varying types of additional coverage and benefits.

  1. Cost Saving

One major benefit of insurance riders is that you can customize a policy with low-cost add-ons rather than purchasing a separate policy to buy a different kind of coverage and increase premium payouts.

  1. Available in various forms

Insurance Riders come in various forms including long-term care, term conversion, waiver of premiums, terminal or critical illness and exclusionary riders.

  1. Useful In Emergency

In some cases, the policyholder’s needs may exceed the total benefit offered in policy and in such a case a rider may be extremely beneficial; especially if it is associated with a health or life insurance policy.

For example, a critical illness rider in which the insurance company promises to pay a lump sum if the policyholder contracts any of the specified critical illnesses mentioned in the policy document.

  1. Waiver of Premium

With a waiver of premium kind of a rider, if applicable on the policy, the premiums due of a policyholder are waived off in case of income loss or disability but the policy remains active as the rider is akin or equivalent to all future payments until the policy period or its time of existence.

  1. Accidental Death Benefit Rider

During the policy term, if the insured passes away due to an accident, this rider pays an additional sum assured. The percentage of this additional sum is calculated on the original sum assured and may vary from company to company.

  1. Tax benefits

Like insurance policies, riders also enjoy tax benefits as per the prevailing tax rules.

  1. Optional but Essential

A rider is an optional add-on to a policy that you need to choose at the time of buying the policy. There are a host of riders that life insurance companies offer.  Accidental death, permanent disability, critical illness riders are the ones that are most popular and should be opted for looking at their total benefits.

The Takeaway

Deciding to go with an insurance rider can be a good investment in terms of securing your future in the most appropriate way as in most cases, riders cover events and issues that may never be covered by a general policy.

In short, a rider simply promises an additional sum, over and above the basic sum assured basis the kind of policy you hold.

Since a rider is attached to base policy, the insurer gets to save on costs by superseding the need to buy more than one standalone policy.