An investor invests in a Unit Linked Insurance Plan (ULIP) in order to ensure the safety and security of his family. But do you think only a ULIP insurance is enough for their protection? Being a market-linked product, ULIPs may be inconsiderate towards your family needs due to market fluctuation, at times. That’s how ‘riders’ come into the picture in order to cover for all the financial exigencies.
ULIP riders are additional features that not only enhance the foundation of ULIPs but also supplement the coverage offered by the policy. Moreover, these riders provide you with the peace of mind that helps to keep your constant worrying at bay. In simple terms, riders are your ‘Plan B’ when anything goes wrong with ‘Plan A’ i.e. the ULIPs. Therefore, if you want to find out the different types of riders, then keep reading:
List of the most commonly used riders in ULIPs:
As the name suggests, a term rider simply adds up to your whole life policy. By employing a term rider to your ULIP Policy, the nominee will receive the sum assured at the time of the death of the policyholder, but before the policy expires. Depending upon the insurance company, this type of riders can be customized wherein the sum assured or the predetermined value is equal. So if you’re looking for an affordable option, then invest in a term rider
Before purchasing a term rider, keep the following things in mind:
- Make a comparison between the premium received on a monthly basis and the total amount of coverage.
- Confirm to check whether you really need a term rider or you’re better off with only a term insurance coverage.2.Waiver of Premium
Another type of rider that stands true to its name is a waiver of premium. There are times when a majority of investors are unable to pay their premiums due to either disability or critical illness which leads to lack of income. During this unfortunate event, waiver of premium keeps you covered by waving off all your premium payments until the expiry of the policy. However, if you don’t opt for this type of rider, then your policy would lapse due to non-payment of premiums, at times of exigencies.
Before purchasing a waiver of premium, keep the following things in mind:
- Consider purchasing it when you’re under 45 when you don’t have any individual disability coverage.
- Do not opt for it if you have a long term disability insurance through an employer.3.Critical Illness Rider
Under a critical illness rider, the policyholder is liable to receive a lump sum amount when you are diagnosed with a critical illness like cancer, heart attack, stroke, and so forth. Following the type and rate of your illness, the insurance company can either terminate or lessen the policy. Other illnesses like kidney failure, paralysis, heart bypass, and organ transplant are also considered.
Before opting for a critical illness rider, keep the following things in mind:
- Read all the terms and conditions carefully.
- Do not opt for it unnecessarily in cases you already have a critical illness policy.4. Accidental Death & Disability Rider
There are two sides to this type of rider. Under accidental death rider, the nominee receives an additional amount of money along with sum assured, at the time of death or permanent disability in an accident. If the policyholder is permanently disabled in the accident, then even the benefits of waiver of premium are also offered. However, these benefits vary depending on the insurance company.
Before opting for an accidental death and disability rider, keep the following things in mind:
- Do not opt for it if you don’t travel by road i.e. via a car, bike, train or any other commercial mode of transport.
- Skip this rider if you don’t frequent the flights for business, leisure or travel purposes or if you don’t work at manufacturing industries.
Include these riders mentioned above only after you have taken time out in understanding its details like the benefits, inclusion, and exclusions, and so forth. Now that you know which type of riders to include when you purchase your ULIP policies, what are you waiting for? With the help of these riders, you will not ensure that all your contingency planning, as well as family needs, are covered.