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Saturday, September 19, 2020

Are There Any Add-On/Riders in Investment Plans?

We understand the term ‘rider’ to mean a proviso(s) or condition(s) added to a set of terms and conditions already agreed. A rider is an addition (add-on) to a document and is often added to investment plans that you would buy from insurance companies for insurance and investment purposes. Since standard policies have set terms that leave little room for flexibility, riders help to personalize and modify those terms to large degree. Some of the best investment plans permit such riders; allowing policyholders some ability to modify and customize their policies.

Benefits of Riders for Investment Plans

The best online investment plans are those that permit the policyholder some amount of flexibility and the ability to streamline a plan to their own requirements. While the best investment plans will offer significant payouts in the eventuality of the death of the insured, there may be no payouts in the event of an accident causing partial or permanent disability or loss of employment. For instance, a healthy young, nonsmoker male could get coverage of up to Rs.1 crore, for yearly premiums as low as Rs10,000. Riders do increase premium but they also increase protections and eventualities in addition to death of the policyholder.

Riders can increase affordability of insurance. Riders can help to club coverage under an umbrella policy rather than having to buy separate policies for separate needs and eventualities. Since riders increase the conditions of coverage, the insurance policy becomes more comprehensive. For instance, in a health plan, it is possible to choose add-ons for critical cover or maternity cover rather than buy separate policies for these eventualities. This is also possible with investment plans.

Whether you choose term insurance, ULIP or traditional endowment (money back) plans riders help to customize your policy so that you receive cover for eventualities that concern you, your lifestyle and circumstances. The best investment plans also help you receive tax benefits; you can maximize your tax benefit under sections 80D and 80C as well, with the help of the policy riders that you choose. 

Riders may only be available at the inception of the policy in some cases, while other plans may permit riders to be added during the pendency of the policy (on policy anniversaries and so on). If the idea of add-ons interests you, find out about these beforehand.

Riders for Investment Plans

Riders are additional (optional) policy benefits that a policyholder or nominee will get benefit of in the event of a specific eventuality. These benefits are over and above the standard coverage of a policy. The riders that a policyholder can opt for may vary significantly from one to another insurance company; the riders available for term plans and endowment plans may also differ considerably. However, the best online investment plans usually offer customers the choice to opt for crucial riders such as accidental disability riders, critical illness riders and waiver of premium riders. Several other add-ons are also available; you can choose the ones that make the most sense to you; not necessarily the ones that come at attractive prices.

  1. Waiver of premium – This is an add-on policy feature that you can opt for to prevent the policy from lapsing or ending in the event of non-payment of premium. Whether you forget to pay your premium or there are financial reasons for not being able to do so, you don’t want your policy to lapse and to lose its benefits as well as the money you have invested so far in your investment plans.
  2. Critical ailments add-on – This rider can help to act like an income replacement plan in the event of the insured person developing critical illnesses. In the event of being diagnosed with critical ailments such as stroke, paralysis, coronary disease or the need for a major organ transplant, certain amounts would be paid for defraying daily / medical expenses. Some insurers also offer specific terms especially for women’s critical illnesses as well.  Some riders of investment plans are a combination of critical cover and premium waiver add-ons. When opting for this rider, if the policyholder contracts any covered critical illness, premiums payable are waived while the benefits continue.
  3. Accidental death rider – While life insurance policies do cover accidental death, opting for an accidental death rider increases or in cases doubles the assured sum that the insurance company would pay to the policy beneficiary in the event of death by accident (as opposed to death by other means). Hence, while the policyholder dying by other means would mean the insurance company paying the full sum assured, in the event of the death being caused by an accident, a specified additional sum will be paid as well.
  4. Accident disability rider – If the policyholder is involved in an accident that renders them disabled and hence unable to earn a living, this add-on feature ensures a regular monthly income for a fixed period. This rider could be with respect to permanent or partial disability. The best investment plans could differ, so be sure find out about the terms and conditions. Opting for accident disability riders typically ensures a monthly payout of 1% of the total sum insured for ten-year duration.
  5. Guaranteed insurance rider – Usually, insurance companies will not offer policies to people above a certain age. By opting for this rider, the policyholder is buying an insurability guarantee, which enhances life cover and insures later stages of life without the need to undergo medical tests. 
  6. Income benefit rider – It makes sense for the policyholder to opt for and pay more for this rider if they are the only earning member of the family. With this rider, the survivors / beneficiaries of the policy receive not only the sum assured under the policy, but also a monthly or quarterly payout for five to ten years after the death of the insured person.

As a policyholder, you would be required to make a decision regarding riders to opt for based on the assessments of one’s lifestyle, line of work, family health history and so on. Do not opt for riders to investment plans because they appear attractive or affordable. Instead, opt for riders that would be required realistically in the unfortunate event of a death, accident or disability.

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