Understanding how riders work in term insurance

Emergencies, by definition, are unpredictable and can take place without any warning. It is never easy to be prepared beforehand to face such situations. Those who face tragedy also have to face the financial toll it brings with it. If a tragedy struck you and your family, or something were to happen to you, your family would be left to face financial uncertainty by themselves.

To ensure that they get the right financial assistance in such situations, you should put your money in term life insurance. You can enhance the coverage of your insurance policy by including riders in it. What are riders in term insurance? How do they benefit you as a policyholder? Read more to find out.

Understanding term insurance

What is term insurance? This is a question many people have when they are looking for a life insurance policy. Term insurance, as the name suggests, is life insurance that comes with a duration for its coverage. The duration of the policy ranges from 5-20 years and can go up to 30 years as well. Under this policy, the dependents of the policyholder are compensated with a death benefit in the event of the policyholder’s untimely demise during the policy term. This amount can be used by the dependents to manage the daily cost of living and secure a financially independent future for themselves.

What are riders?

Riders are top-ups or add-ons that you can include in your term life insurance. Riders help in increasing the scope of coverage of the policy. Their coverage helps in protecting you from the additional costs of an emergency. While your term insurance will give broader coverage during life risks, riders provide coverage for specific instances within an emergency.

What are the types of riders?

Listed below are the types of riders you can include in your term insurance:

1. Accidental death benefit add-on

This compensation is given if the demise of the policyholder was caused due to an accident. The amount that is given as compensation is calculated by taking into account the actual sum assured under the policy. Do read the policy document carefully to understand how much amount you are entitled to under this rider.

 2. Accidental disability benefit add-on

If you were to suffer injuries in an accident that caused partial or total disability, the rider will compensate your dependents. For example, if you suffered total disability following a bike accident, you may not be able to work anymore as you may be restricted to your bed. Having this rider in your term insurance will ensure you and your family do not face any financial burden. The rider gives regular pay outs for the about five to ten years after the accident has taken place. This payout is given from the sum assured, with the percentage being fixed by the insurer. Therefore, this becomes a source of income. Do keep in mind the rider is effective only if the disability is caused due to an accident.

3. Critical illness add-on

Diseases related to the heart, kidney, and liver are considered critical illnesses. Cancer and total disability are also considered critical illnesses. If you were to get diagnosed with any of the critical illnesses, the cost of treatment could be quite high. In such situations, having the critical illness rider in your term insurance can be beneficial. After you have been diagnosed with a critical illness, you would receive a lump sum amount under this rider. This amount can be used to cover the cost of treatment. Check the policy document carefully to see which diseases are considered as critical illnesses by your insurer.

3. Waiver of premium add-on

Under this rider, the insurer waives off the remaining premium payments if the policyholder is unable to pay them either due to loss of income or not being able to work due to being disabled. Having this rider ensures that your policy does not expire or get terminated, which would be the case without the inclusion of this rider in your term insurance. Check with your insurance provider to understand which conditions this rider may cover.

How to select riders?

When you are purchasing your policy, only select riders that you think may benefit you in the long run. It should be noted that the inclusion of riders may increase the cost of your policy. Including too many riders may make your policy more costly.


This is how riders can benefit you and your loved ones when you include them in your policy. If you wish to know more about the other term riders related to term insurance, you can consult with your insurance advisor.

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