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In term insurance, the rider sum assured refers to the additional amount of coverage provided by a rider on top of your base policy. Riders are add-ons that enhance your basic term insurance by covering specific situations, like accidental death or critical illness. The rider sum assured is the benefit you or your beneficiaries will receive if the conditions of the rider are triggered during the policy term.
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Understanding how the rider sum assured works, along with its policy and premium payment terms, is crucial to getting the best coverage.
The rider sum assured is the amount of money the policyholder or their beneficiaries will receive if the event covered by the rider occurs. It is separate from the base sum assured of your term insurance policy, which is the payout in case of your death. Term Insurance Riders like accidental death, critical illness, or waiver of premium each come with their own sum assured.
For example, if your base term insurance has a sum assured of ₹50 lakhs, and you add an accident cover rider with a sum assured of ₹20 lakhs, your beneficiaries could receive ₹70 lakhs if you die in an accident.
Term Plans
The policy term of a rider is the duration for which the rider is active and offers protection. In most cases, the policy term of the rider is aligned with the policy term of the base term insurance plan. This means if your term insurance policy has a 20-year policy term, your rider will also last for 20 years.
If you have a 20-year term insurance plan with an accidental death rider, both the base policy and the rider will provide coverage for the entire 20 years. If the life assured dies in an accident within this period, the rider sum assured will be paid out along with the base sum assured.
Some term insurance riders, like the waiver of premium riders, may have a shorter policy term. For example, the waiver of premium rider might expire when you turn 65, even if your base policy lasts until age 75.
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The premium payment term refers to the number of years or frequency with which you need to pay premiums for the rider. Usually, the premium payment term for a rider is the same as the base policy. If you choose to pay monthly or annually for your term insurance, the same payment schedule will apply to the rider.
However, in some cases, the premium payment term may differ. For example, certain riders may offer a limited premium payment option, where you only need to pay for a few years but enjoy coverage for the entire policy term.
You have a 20-year term insurance policy with a limited premium payment term of 10 years. You add a critical illness rider with a premium payment term of 10 years. This means you will only pay for the rider for 10 years, but it will continue to provide coverage for the full 20 years.
Accidental Death Benefit Rider: This rider offers an additional payout if the policyholder dies in an accident. The rider sum assured could range from ₹10 lakhs to ₹50 lakhs, depending on the insurer’s T&Cs. The policy term and rider premium payment term usually align with the base policy.
Terminal Illness Rider: This rider pays a lump sum amount if the policyholder is diagnosed with a terminal illness during the policy term. The rider pays a percentage of the base sum assured or the entire sum assured. Like other riders, the premium payment and policy term often match the base policy.
Waiver of Premium Rider: This rider waives future premiums if the policyholder becomes disabled or critically ill. While it doesn't provide a lump sum payout, the benefit is that you can maintain your term insurance coverage without having to pay further premiums. The policy term may have an age limit, such as 65 years.
Income Benefit Rider: This life insurance rider provides a monthly income to the family in addition to the death benefit. The sum assured is typically structured as a percentage of the base policy’s sum assured, paid out over a fixed number of years, such as 10 or 20 years.
Assess Your Coverage Needs: You should assess your specific needs when choosing the sum assured for a rider. For example, if you work in a high-risk occupation, an accidental death rider with a higher sum assured might make sense.
Keep Affordability in Mind: Riders come with additional premiums, so it's important to balance the sum assured with affordability. Higher coverage means higher premiums, so ensure you can comfortably pay the premiums throughout the policy term.
Align Policy Terms: Ensure that the rider’s policy term aligns with your life goals. For example, if you want critical illness protection until you retire, choose a rider with a policy term that matches that timeline.
Premium Payment Options: Term insurance riders often offer flexibility in how you pay your regular premiums. You may opt for limited payment terms if you want to finish payments early while still enjoying coverage for the entire policy term.
Adding riders to your term insurance policy can significantly enhance your coverage by providing protection for specific risks like accidents or critical illnesses. The rider sum assured defines the additional payout you'll receive in case of a claim, while the policy term and premium payment term govern how long you’re covered and how you’ll pay for it. By choosing the right rider sum assured and understanding the terms, you can ensure that your term insurance provides comprehensive and affordable protection tailored to your needs.
†Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by any insurer. This list of plans listed here comprise of insurance products offered by all the insurance partners of Policybazaar. For a complete list of insurers in India refer to the Insurance Regulatory and Development Authority of India website, www.irdai.gov.in
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