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Increasing Term Insurance and Riders

  • 17th Dec 2018
  • 655
Increasing Term Insurance and Riders

In today's world, getting a life insurance has moved from being an option to a necessity. The main objective of a life insurance policy is to ensure that the family does not face a financial crisis in the unfortunate event of the death of the member who earns. Term insurance policies offer pure protection covers. It gives the family a lump sum amount on the death of the life insured. You could also choose to have monthly payments instead of one single amount. Choosing the right term insurance policy is critical. You should opt for an increasing term insurance that offers enough protection to your family in case you are not around. If at any time after taking the policy, you feel like the sum assured is not enough, you should look at increasing term life coverage.

When choosing a term insurance plan, the most important factor is, of course, the sum assured. You need to think carefully before deciding on this sum. This should be based on your income, expenses, assets, liabilities, and the financial goals for your family. Note that the market situation as well as your financial situation is dynamic and may change over the years. Also, make note of inflation over the years and consider all these aspects before deciding on the sum assured. 

Increasing term life coverage

The ideal situation is to have a valid term insurance policy at least until you retire. A term insurance is a contract; hence, it cannot be changed as per your wish. Once you decide on the sum assured, you cannot change it throughout the policy's tenure. However, you can look at increasing term insurance cover by using the increasing sum assured option with the same insurance provider. This option lets you increase your term insurance cover at regular intervals thus taking care of the increasing expenses of your family. Some term insurance plans also offer life stage protection features. This means that the sum assured increases with main life milestones like wedding and birth of a child. Increasing term insurance is a good option as it ensures that you are covered at every stage of your life.

Using riders

Riders are a very important part of term insurance policies. Riders are optional add-ons that allow you to customize your term insurance policy as per your requirement. Of course, it comes at an additional cost. It lets you add extra coverage and extra protection against risk factors. If you do your homework and select your riders carefully, they can make your term insurance plan watertight. The main purpose of riders is that they offer you more than what your base policy offers. A few common examples of additional insurance riders would be critical illness rider, permanent disability rider, and personal accident rider, among others. Riders normally come cheaper than the basic policy. They cost anywhere between 5 to 10 percent of the basic policy amount. It is recommended to opt for your riders at the time of policy issuance. The earlier you opt for a rider, the lesser it will cost you. There are no restrictions on the number of riders you can add to your term insurance policy. However, as per the Insurance Regulatory and Development Authority of India (IRDAI) regulations, your rider premium cannot exceed 30 percent of your base insurance policy premium.

You can get personal accident cover, critical illness cover, and permanent disability cover as both a standalone policy as well as an additional rider. If at any point you feel that it is not sufficient, do look at increasing term life coverage as mentioned above. Remember that a rider added to your existing policy will always be less expensive as compared to a new standalone policy. If you are looking for a specific type of protection for a short time period then a rider is a good option for you. Ensure that you carefully evaluate your lifestyle, financial assets and liabilities, your occupation and other such integral factors before deciding on which riders to opt for. It may take time and seem overwhelming with the number of choices available, but it is vital to make the right choice that suits you and your family. 

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