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Myth Busted: Do Life Insurance Riders Really Break the Bank?
When it comes to buying life insurance, there's a common belief that adding riders will make your plan more expensive than it was earlier. Many people hear the word rider and immediately think, "That's going to cost me a lot!"
But here's the truth: life insurance riders don't cost as much as they appear to cost. They are little extras that customize your policy and are a smart and affordable way of making your policy work harder for you.
This post will discuss what riders are, why there's a myth about their cost, and why you should always add riders to your life insurance plan.
What Are Life Insurance Riders
A rider is an addition to your life insurance policy. It gives you some extra coverage to your usual life policy according to your requirements. Some of the most popular riders are:
- Critical Illness Rider: Pays a lump sum if you develop a critical illness like cancer, heart disease, or kidney disease.
- Accidental Death Benefit Rider: Pays an extra sum if you die by accident. It pays an extra amount to the beneficiary if you die accidentally.
- Income Benefit Rider: Pays your family members your daily income for a while if you die unexpectedly.
Why People Believe Riders Are Too Costly
This myth is most likely the result of misinformation and misinterpretation. When we hear "add-on" or "extra," our brains immediately think "extra cost."
Moreover, the terms and terminologies in term insurance or life insurance can be very difficult to understand for someone new to this field. You already have the premium, coverage terms, and policy terms to deal with. On top of that, hearing about riders or add-ons makes people think that their costs will rise significantly.
But the thing is, most riders are actually very cheap, particularly if you compare what they provide for it.
Are Riders Really Expensive? Let's Understand With an Example
Suppose you're a 30-year-old with no health issues buying a regular term insurance with a cover of ₹50 lakhs for 30 years. You will pay approximately ₹500–₹800 a month. Adding a critical illness rider would cost you maybe an extra ₹200 a month, or even less, depending on the insurance company.
So, is ₹200 too much? Not when it provides you with a sense of security that if you do get hit with a critical disease, you'll receive financial assistance for that. That's much less expensive than paying for hospital and treatment expenses out of your pocket.
Similarly, an accidental death benefit rider will cost you as little as ₹50–₹100 extra a month. That's the cost of a cup of coffee but with the additional advantage of leaving behind a larger financial pillow for your loved ones.
Why Riders Are Worth It
Here's why it is a good decision to add riders to your policy:
1. They Provide Personalised Protection
Your life and your needs are special. Riders enable you to tailor your policy to suit your lifestyle, your health, family requirements, and your financial aspirations.
2. They're Cost-Effective
Purchasing a new policy for disability or critical illness will be more expensive than purchasing a rider on your base policy. Riders are a cheap means of increasing coverage.
3. They Streamline Your Insurance Portfolio
Instead of numerous policies with various renewal dates, you can keep it all under your base life insurance policy.
4. They Give You Peace of Mind
Knowing that you're covered in more ways than one can reduce your stress, especially in uncertain times.
A Final Word
At the end of the day, life insurance is about securing your loved ones' future, and riders are tools that make that security even stronger. Don't skip them just because of a myth. Yes, they cost a bit more. But no, they don't cost an arm and a leg. In fact, the added security they provide can be worth every rupee. When it comes to insurance, it's not about being frugal; it's about making smart decisions for those who are looking up to you.
FAQs
1. Can I add riders later on if I don't want them now?
Yes, most insurers let you add some riders on policy anniversaries, although there can be additional underwriting or health checks involved.
2. What happens if I don't make use of the rider benefit within the policy term?
If the rider benefit isn't paid, the premium you paid for the rider isn't refunded to you.
3. Do riders impact my life insurance claim procedure?
No, they won't delay or complicate the basic claim. Rider benefits are paid out separately in addition to the basic policy payment if justified.
4. Will riders rise annually, like health insurance premiums?
The majority of the rider premiums remain the same throughout the rider term except where attached to a renewable term plan or age-band charging.
5. Can I terminate a rider on my policy halfway through its term?
Yes, generally, you can expect to terminate a rider during the policy term, though re-attachment later on can require medical checks and other formalities.
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