Saturday, December 04, 2021

Know how to increase coverage with term insurance riders

A term insurance policy is a high-cover, low-cost insurance plan meant specifically for life protection. Know all about it here...

Updated: August 26, 2020 3:38:47 pm
Image credits: Bajaj Allianz Life

Life has its own share of risks and realities. The biggest risk in life is the risk of dying early, especially when one’s life goals are yet to be achieved. And then, there are other kinds of risks as well. One may fall sick to a dreaded disease or may meet with an accident. Keeping these risks uncovered may result in derailing of the life goals as the person may be away from work for several days or even weeks.

Of late, we all have seen the impact of COVID-19 on our lives and are even experiencing it on daily basis. Literally, out of nowhere, the COVID-19 pandemic has emerged as a fatal disease, even resulting in the death of thousands of people.

According to the Ministry of Health and Family Welfare, as on August 17, over 50,000 people have lost their lives due to COVID-19 in India alone! [1]

An untimely death leaves the family stranded for financial support unless one has made provisions for it in the form of accumulated wealth or, in other cases, in the form of life insurance. However, if someone considers that buying some random life insurance cover alone is enough to keep oneself and one’s loved ones protected, then one needs to think again!

Is your coverage enough?

What one also needs to ensure is that the coverage is adequate enough to take care of the family in one’s absence. Most financial planners suggest keeping a life cover of at least ten times of one’s take-home income [2]. So, if the take-home income is, say, Rs 20 lakh, one needs a coverage of at least Rs 2 crore. The actual requirement will, however, depend on one’s age, financial responsibilities and liabilities, among others.

The most apt solution is to correctly estimate the need and then buy a term insurance plan. A term insurance policy is a high-cover, low-cost insurance plan meant specifically for life protection. By paying a small premium in a term insurance plan, one can get a relatively higher sum assured in the policy.

On death during the term of the policy, the sum assured is paid to the nominee, while on surviving the policy term, nothing gets paid to the policyholder on maturity. There are, however, certain Return of Premium plans in which the premium paid during the term of the policy is paid back to the policyholder on surviving the term of the policy.

But, there are other risks as well. So, how does one increase one’s life insurance coverage and ensure that the risks are covered on all fronts?

Riders – What they are and their role

For increasing life insurance coverage and for complete 360 degree protection, there are insurance riders to opt for. A rider is basically an add-on to a life insurance policy. One can optionally add riders to the base term policy at a nominal cost in terms of premium and can considerably enhance the coverage.

There are a few important life insurance riders such as Accidental Death Benefit Rider, Accidental Permanent Total or Partial Disability Benefit Rider, Critical Illness Rider, Waiver of Premium Rider, Family Income Benefit Rider, among others.

360 degree coverage

Let’s see what risks they cover, and how they increase the overall coverage for the policyholder.

Accidental Death Benefit Rider: Accidents are accidental and if an accident is fatal, one may even end up losing one’s life. While an insurance policy such as a term insurance plan provides death benefit both in case of a natural death or an accidental death, adding the Accidental Death Benefit (ADB) rider enhances the coverage in case the death happens due to an accident. If the Bajaj Allianz Accidental Death Benefit Rider, for instance, is attached to the base policy, in case of an accidental death, an additional sum assured is paid to the nominee.

Accidental Permanent Total or Partial Disability Benefit Rider: At times, one may survive an accident but may become disabled and fail to carry normal day-to-day functions, including employment activities. In such a situation, if one has added the Bajaj Allianz  Accidental Permanent Total/ Partial Disability Benefit Rider to the base policy, a lump sum amount is paid to the insured, depending on the terms and conditions as of the rider. Thus, the overall coverage gets enhanced for the policyholder.

Critical Illness Rider: A life-threatening ailment could wipe out one’s life savings, thus affecting one’s life goals. The role of a Critical Illness (CI) Rider is to provide a lump sum amount in case the policyholder is diagnosed with any of the specified illnesses. So, even while the policyholder is alive yet undergoing treatment for a critical ailment, the CI rider such as the Bajaj Allianz Critical Illness Benefit Rider reduces the burden by providing financial support to the insured.

Waiver of Premium Rider: One buys a life insurance policy to meet long-term goals such as children’s education. An untimely event earlier in life can put a person in a situation that he is unable to pay the premiums of the insurance policy, thereby putting the future financial goals in danger. A Waiver of Premium Rider comes to one’s rescue in such a situation.

If one has the Waiver of Premium (WOP) Rider such as the Bajaj Allianz Waiver of Premium Benefit Rider, attached to the base policy, on the occurrence of pre-defined conditions, all the future premiums in the policy are waived off. The policy, however, continues until its original term with no change in the maturity benefits. The importance of WOP is more relevant while funding children needs through a life insurance policy as it ensures the child goals are met even in case of any exigency.

Family Income Benefit Rider: On the occurrence of death, one’s family needs financial protection to maintain the same standard of living as before. However, in the event of disability arising out of an accident or critical illness, the earning capacity of the insured gets reduced considerably. Bajaj Allianz Family Income Benefit Rider provides a regular monthly income to the family in case of death, accident disability or on the occurrence of any of the specified critical illnesses as per the rider terms and conditions.

Important to note is that the rider benefits are in addition to the term insurance benefits provided by the base plan thus enhancing the overall coverage for the policyholder.


The role of riders in a life insurance policy is to enhance the coverage so as to cover different risks arising in life. Leaving the risks unattended could make the purpose of having life insurance fall short of its objective. In that case, the very purpose of having a life insurance cover may go for a toss. Depending on the rider terms and conditions, one can add a rider to the life insurance policy at the time of buying a life insurance policy or even at a later date.

If the COVID-19 episode is a wake-up call, then so be it. To remain under-insured or not getting all the risks covered could be a terrible insurance mistake no one will want to commit. As far as life goals are concerned, adding Bajaj Allianz Life Insurance Riders in your term Plans can be the step forward to ensure complete peace of mind and additional protection to secure you and your loved ones life goals.

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