Enjoy The Ride

Your insurance policy may come with options for additional covers, which could make a big difference. Don’t let the incremental cost put you off, says Najaf Ishrati

Nov 29, 2005,
ET Personal Finance, Mumbai

EVER put together a jigsaw puzzle with painstaking care, only to realise that the last piece was missing? Insurance products available today are designed to suit almost all insurance or investment needs, but there could still be that one crucial piece missing.
In insurance terminology, that piece would be called the ‘rider’. Riders are economical purchasable add-ons to the basic policy, which customise it to a high degree. Suppose you’ve taken a life policy, but due to some unfortunate incident are incapacitated from earning. This earning loss could easily nullify a thus-far paid-up policy, if the premium payments aren’t made on time. Wouldn’t it be nicer if your policy provided for such an eventuality, exempted all premium-paying requirements and yet promised death or maturity benefits? Or say a rider, which would pay a specified sum to the insured, if he were terminally ill with less than six months to live?
Although initially, riders can seem like an added and unnecessary expense, they must be given some thought nevertheless. Its just that the saying, “who knows what can happen?” sounds a whole lot better than “who knew that this would happen?”
Quite a few riders are available in the market. The accidental death rider assures an extra amount payable, over and above the base amount, in case of death in this manner. Under a permanent disability rider, premium for the basic plan may be waived to the extent of the rider sum assured. With an income benefit rider, the death of the life assured during the policy would assure an annual percentage of the rider sum to the beneficiary, on each policy anniversary till the maturity of the rider.
The waiver of premium rider is another name for the permanent disability rider, although here, all future premiums are waived. Another useful rider is always the one for critical illnesses, where protection is provided against 8-12 critical illnesses, such as major organ transplants, renal failure, stroke, paralysis, heart attack, valve replacement surgery, cancer, etc. Benefits are paid on contracting the said illness, up to the amount specified.
Then there is something called the guaranteed insurability rider, where ironically, it insures your insurability. It guarantees the buyer the right to purchase additional insurance at different stages in his life, without any further medical examination. If incremental responsibilities are expected ahead, this one might be a good option. A simple option is the term rider, which allows you to manage your changing needs and buy additional life insurance for a limited period. The dread disease rider improves your financial position as and when medical expenses rise in the event of specified diseases.
So, whether you’re planning on riding it alone or not, it always makes sense to critically examine these insurance companions before brushing them aside due to slightly incremental costs.