Financial security for your family members must be made your priority amid the uncertainty going around in this world. Of all the straightforward ways to go about this task is through the instrument of a term insurance product. An appropriate amount that an individual should spend for term insurance can easily accommodate a cover to the tune of ₹1 crore for your dependents. Though this is a very comprehensive standard-term insurance, the answer to all kinds of risks involved cannot be provided. That is taken care of by riders and add-ons.
Riders also act as add-ons that supplement your base term insurance plan by being an extension of the above insurance product meeting specific additional needs for you. Any policyholder who wants to optimize the ₹1 crore term insurance needs to know what riders are available and what they have to offer. So, let’s take a closer look at how one can enhance his term insurance plan with the right riders and add-ons.
Why Riders and Add-ons?
While a ₹1 crore term insurance offers excellent cover, life is not that straightforward. At times, life may take turns in ways where additional protection might be needed. Riders allow you to:
- Add Coverage: This can be specifically for risks not covered under the base policy.
- Cost-Effectiveness: Most riders are cost-effective compared to buying standalone policies for similar coverages.
- Personalized Plans: Avail term insurance based on special personal and family needs.
- Tax Benefits: The premium paid for riders may be eligible for deduction under Section 80C or Section 80D of the Income Tax Act, as the rider falls in the specific category.
Compulsory Riders to Consider
Critical Illness Rider: A critical illness rider is an insurance that delivers money in the event of the policyholder developing critical conditions such as cancer, heart attack, or renal failure. Coverage gives the amount paid by the insurer in one go to help manage the treatment of the patient, loss of income, and other expenses made while in the treatment.
- Why it’s needed: Critical medical conditions can drain savings accounts pretty quickly. This rider ensures that treatment does not impact your family’s lifestyle, giving you the chance to recover.
- Example: You purchase a term insurance policy of ₹1 crore with a critical illness rider of ₹20 lakh. After you are diagnosed with an illness covered under the rider, you will receive ₹20 lakh. The balance amount of ₹80 lakh is retained as your term insurance coverage.
Accidental Death Benefit Rider: This rider gives you the extra benefit that your nominee will get if you die from an accident. It is very helpful for anyone exposed to dangerous jobs or who travels a lot.
- Why it matters: Accidents are unforeseen. The financial stress might creep in quite soon for dependents.
- Example: Suppose you have a policy of ₹1 crore with an accidental death benefit rider of ₹50 lakh. Upon the event of an accidental death, your nominee would receive ₹1.5 crores.
Waiver of Premium Rider: Under this rider, all future premiums will be waived off, in case of permanent disability or serious illness to the policyholder. Therefore, the policy would not lapse during those times you can’t pay premiums.
- Why it is important: At the worst time possible, this rider provides coverage to the individual without a liability to pay future premiums.
- Example: If there is a serious illness that prevents an individual from going to work, then this income benefit rider pays the future premiums of his plan without allowing him to lose the cover amount of ₹1 crore.
Income Benefit Rider: This rider pays a regular income to your family besides the lump sum payout in case of your death. The income could be paid monthly or annually over a pre-determined period.
- Why it’s important: It ensures that your family has a steady income to pay for day-to-day expenses.
- Example: Your ₹1 crore policy comes with an income benefit rider that pays ₹50,000 each month for 10 years, providing financial comfort to the dependents along with the lump sum benefit.
Terminal Illness Rider: The rider pays advance in case the policyholder has been diagnosed to have a terminal illness. That helps in offsetting the costs of treatment and brings peace when there is such a situation in life.
- Why is it important: Terminal diseases are highly expensive and tensionous propositions to tackle. This rider will bring you the desired money instantly.
How to Select the Best Riders
To choose the best riders for your term insurance, you have to perform a deep study of your lifestyle, family obligations, and likely risks. Here’s how you do that:
- Evaluate Your Needs: Look into your financial duties, health history, and occupation risks and compare them to determine what lacks in your present insurance.
- Cost Apprehension: Use a term insurance calculator to estimate how adding riders would impact your premium. Ensure that the additional cost matches your budget.
- Read Between the Lines: Know the terms, conditions, and exclusions of each rider before choosing to opt for it.
- Seek Expert Advice: Consult financial advisors in regard to the selection of riders to complement your ₹1 crore term insurance plan.
Advantages of Rider Supplementation to a ₹1 Crore Term Insurance Policy
- Total Safety: The riders can be used to fill the gaps created by the base policy, thus establishing total safety.
- Economical: It is less expensive than a separate policy.
- Flexibility: The policy can be modified with changing needs.
- Less Stress: Better Preparedness to Face Unknowns of Life
Common Myth About Riders:
- “Riders are costly”: Which is a complete lie because it adds only a fraction to the total premium but its benefits in most situations are of huge worth.
- “All riders provide the same benefits”: different insurance companies might have different terms and conditions. The comparison is vital.
- “I don’t need extra coverage”: life is uncertain. Riders will ensure your policy evolves according to the changes in risk.
Best Term Insurance Plan for ₹1 Crore
While selecting a term insurance plan, one must consider insurers that offer flexibility in rider selection, competitive premiums, and excellent claim settlement ratios. Compare policies with the help of tools like a term insurance calculator and select the best term insurance plan for 1 crore.
Conclusion
A term insurance policy of ₹1 crore, thus, represents a strong safety net but can certainly not be termed as all in one fit. You may well make the coverage more specific and personalized to mitigate specific risks by adding various riders and add-ons that may bring comprehensive security to your family. Riders including critical illness, accidental death, and income benefit will guard you against the vagaries of life.
Hence, take some time to understand your needs and all the options available before making the right decision. After all, a well-structured term insurance plan is all about securing their future while giving them the strength to thrive, no matter what life throws their way.