At this stage of life, it is not news that life can be very uncertain. There are always things that can happen to you that have a huge impact on your life. If you have a family, something that can affect you will definitely affect them. You may wonder what is term plan and how will it help? Term insurance is a pure life insurance product, which provides financial protection to the policyholder. In case of death of the insured during the policy period, the beneficiary receives a death benefit as defined under the chosen term insurance plan.
Having a term plan will allow you to safeguard their financial future in the worst scenario. This is because term insurance is typically only focused on life insurance. However, it also has various other features and coverages.
Even though term insurance provides a large sum of money at the time of a claim, many people still require more than their initial sum. Moreover, there are certain situations in life that require more than just a large amount of money to solve. In such a situation, term insurance add-ons can help provide for your family’s needs after your death in a refined manner.
What are term insurance add-ons?
Term insurance add-ons or riders are benefits that are added to the basic coverage of an insurance policy. They have additional benefits in addition to the term insurance benefits. These are not included in standard insurance policies. The add-ons available to you can vary depending on the policy you buy. There are many advantages and features offered by riders. However, since they charge an extra premium, make sure that you are able to afford them before buying.
Benefits of taking add-ons
- Extra coverage can help you customise the features you want in your policy. If you end up buying a term insurance that doesn’t have the features that you want, then you can add riders to make it work seamlessly.
- In addition to getting tax benefits from the base term insurance policies, there are some riders that can also provide additional tax benefits.
- Riders help people plan for their financial future. They make sure that they have the coverage they want. Hence, they won’t need to spend too much extra money on getting additional coverage for specific situations. Not having the benefits you want may make it hard to save for retirement.
Common term insurance add-ons
- Increasing coverage rider
Term insurance policies are taken to ensure that your family’s needs are met in the event of your death. You may think of all the needs that come to your mind and then select the coverage amount. However, as time goes by, the amount you choose may not be enough for the future. The increasing coverage rider is designed to meet the needs of your family in the present and the future. As per this add-on, the coverage amount can be increased over time by a certain margin to match your family’s financial needs.
- Accidental disability rider
Term insurance is a great way to ensure that your family has enough money in case of financial difficulties. This also includes providing a financial safety net for your family when you cannot provide for them. This refers to any disability caused by an accident. This can be done through the accidental disability rider.
- Critical illness rider
Critical illness is often associated with health insurance. They are life-threatening conditions that can be treated with hospitalisation or even lead to death. Some of these include cancer and heart conditions. Critical illnesses are expensive to treat and require extra coverage. To combat this financial burden, a term policy provides coverage for critical illnesses through its critical illness add-on. It will provide you a lumpsum payout in case you get diagnosed with any illness that the insurance provider classifies as a critical illness.
- Income rider
If you are the sole breadwinner of the family, your death can be even more devastating for the family. It would not only mean that they lost a loved one, but also that they lost their only source of income. Without you, your family might not be able to sustain their lifestyle. This income can be provided to your family through the regular income add-on of a term insurance policy. As per the add-on, the payout that your family would get will be disbursed in equal installments after fixed intervals of time.