When planning your finances for the future, you may take several priorities and goals into account. However, uncertainties of life like a sudden loss of job, medical emergency, and other unfortunate incidents can disrupt your plans and affect your financial health. Therefore, experts recommend having a term insurance policy as part of the investment portfolio.
However, to be fully prepared for life’s uncertainties, there is plenty of scope for the term plan to get a few upgrades and better protection. The best way to upgrade your term plan and enhance the coverage is to purchase riders or add-ons.
But, before we get into more details about riders, let us first understand what term insurance is.
What is term insurance?
A term plan is a type of life insurance policy where you get protection against death for a fixed duration or ‘term.’ In the event of your unfortunate demise during this period, the insurance company will pay the death benefit, i.e., the policy’s sum assured to the nominee.
One of the most significant benefits of term insurance is that it has the most affordable premium compared to other traditional life insurance policies. It also offers far better flexibility in terms of adding one or more riders to suit your specific needs.
What are riders?
Riders or add-ons are additional coverage options that you can purchase by paying an additional premium. You can customise your term plan by adding one or more riders as per your need. Some of the common riders you can purchase with your term plan include critical illness rider, accidental death rider, a permanent disability rider, child support benefit rider, etc.
What are the benefits of buying term insurance riders?
Today, as we live in increasingly uncertain times, unfortunate incidents can occur at any time and in different ways. In such a situation, term plan riders can help you get coverage against certain events or risks that are not otherwise covered under a regular term insurance policy. Riders also allow your family to get an additional financial cushion when they need it the most.
If you want to enhance your coverage because of the changing situation, you may feel tempted to buy a separate policy. However, purchasing a new plan means you must re-do the whole process of submitting an application, submitting documents, etc. You can avoid all these hassles simply by adding riders to your existing term plan and get the additional protection you need.
By eliminating the need for investing in a new plan altogether, buying a rider is a more affordable option. This is because riders are cost-effective compared to purchasing a new life insurance policy altogether, and you can achieve the same result.
Another significant benefit of buying riders is that you can get tax benefits. The additional amount you pay for the riders is eligible for a tax deduction. Thus, you can reduce your overall annual tax liability.
The importance of term insurance in securing the financial future of your loved ones cannot be stressed enough. It is one of the most economical and flexible forms of life insurance, and with riders and add-ons, you can rest assured that you get enhanced protection as per your requirement.