One of the primary reasons we need a source of income is financial safety and independence. This income however can be subject to various complications, which can arise due to many factors out of our control. To be prepared for such complications, we opt to build wealth and while we are at it, look to secure the future by investing some money in life insurance policies.

Life insurance policies are a backup for your family for emergencies which have major financial consequences like an automobile accident or untimely demise. For a family, the loss of a breadwinner can be financially devastating. It has the potential to ruin the financial and social status but if they were prepared for such an event, the life insurance coverage will give them the financial capabilities not only to pay off any expenses but also enable the family to maintain their lifestyle.

Life insurance plans only work if the premiums are paid fully and on time. But what happens if the policyholder is unable to make these payments. What if the policyholder requires some financial assistance now, rather than after their demise. Well this is where adding a rider to an existing life insurance policy comes into effect.

What are Insurance Riders?

An insurance policy rider is an addition or modification to an existing insurance policy that provides additional coverage to the policyholder. Basically it is additional protection against risk. Riders are add-ons that supplement your insurance policy which you can opt for which make your insurance coverage robust and wide, giving the policyholder more coverage than that of untimely demise.

Why Add Insurance Riders to Your Policy?

Insurance riders give the added benefit of being covered for more than one potentially hazardous situation. Despite this, there are more benefits to them:

Better Protection: One of the most important reasons to add riders to your insurance policy is that you want your family’s future to be safe from more than just one hazard. Without a doubt, death of the family’s earner is usually one of the major factors leading to financial difficulties. But, other calamitous events like accidental disabilities, life-threatening illnesses often incur massive and financially draining expenses and are equally as devastating if not more.

Enhanced Cover: By adding riders to your insurance policy you also increase the total coverage that you will receive. For example, if the base insurance policy has an assured payout benefit of Rs 1 crore, by adding a critical illness rider you can increase the coverage by Rs 25 lakhs, which will be added to the base policy payout.

This is one of the major benefits of including a rider, due to the fact that many cases like accidental deaths, long hospitalization and medical expenses may precede the eventual demise. Thus, your loved ones will require a lot more money than just the death benefit to look after all the expenses.

Premium Waiver: If the policyholder is severely injured leading to disability or is suffering from a critical illness, it stands to reason that the life insurance riders covering these risks will provide financial assistance. But due to these circumstances it will also mean that the policyholder will most likely not be able to continue earning their normal income and as a result will not be able to continue paying the policy’s premiums leading to the insurance policy becoming inactive.

This is easily dealt with if the policyholder has also opted for a premium waiver rider. So if the circumstances does arise, where the policyholder submits a claim for illness or disability, their life cover continues without any additional payment.

Minimal Management Hassles: Riders are a supplement to the base life cover and work along with them. But if the policyholder were to purchase a separate accidental and critical insurance cover, they will have to pay more premiums and will also have more than one policy to manage. Another factor to reconsider getting separate covers is the combined benefits for both will not be available.