Term life insurance is beneficial for every earning individual who provides for the dependents in his/her family. While it is easier and quite budget-friendly to buy a pure term plan, whether to add riders/add-ons or not is yet another commonly asked question. The right perspective to look at riders for term life insurance is that they make the policy more comprehensive.
There are various instances or life events that are not covered in a basic term policy. For example, an individual may not get any term insurance benefit if he meets with an accident and experiences disability unless there is a rider associated with it to cover such possibilities.
One such blessing in disguise for term life insurance buyers is the waiver of premium rider. Let’s talk about this rider in detail.
What is Waiver of Premium Rider?
It is an additional benefit clause that can be added to life insurance policies. Under this rider, the insurer need not require the life insured to pay the premium to keep the policy in force under certain specific conditions.
In general, it waives premium payments in case the insured becomes seriously injured, faces permanent or temporary disability, or suffer from critical illnesses. Other rider-specific terms are also applicable to defining the benefits and may vary from one insurer to another.
How Does the Waiver of Premium Rider Work?
Once you add this rider with the best term life insurance plan, you safeguard yourself against the possibility of becoming severely ill or disabled in case of an accident. You can add this rider for supplemental benefits under your term life insurance plan. The related cost may vary as per your eligibility and chosen insurer.
Furthermore, the addition of a waiver of premium rider includes an upfront rider fee to the term life insurance premium. Since it raises the total premium payable, you need to assess your needs and budget for the same before purchasing a plan.
In most cases, this rider comes with a waiting period during which you cannot claim any benefit. If an unfortunate event occurs during this period, the insurer may refund the paid premium.
Other important things you should know about this term life insurance rider are:
- The cost of inclusion of waiver of premium rider in the best term life insurance plan is not very high. One can easily plan to add it to the policy.
- Some insurance companies may ask the policyholders to fulfill certain age- or health-related criteria before being eligible for the waiver of premium benefits. Hence, you should check the policy documents carefully.
- An individual cannot opt for this rider if he/she is already disabled or suffering from certain pre-existing illnesses.
- In case the policyholder fails to pay any premium till the end of the applicable grace period, the rider clause will lapse, resulting in the loss of the related benefits.
A disability or a critical illness has a direct impact on an individual’s earning capability. Depending on the condition’s severity, it becomes difficult to pay for the household expenses, let alone considering to meet miscellaneous expenses or paying term life insurance premium.
With the waiver of premium rider included in your policy, you can enjoy a waiver of all premiums when diagnosed with a life-threatening illness, dismemberment, or death. The rider term will be the same as the premium payment term of the base plan or the remaining payment tenure if the rider is included at a later stage. Once lapses, the rider can only be revived within two years starting from the first unpaid premium date provided the base plan is active.
How Much Premium is Payable for This Rider?
The rider document can tell you more about the range in which rider premium can vary. It can be different from one insurer to the other. To get an idea of the premium estimate, let’s take the example of Max Life Waiver of Premium Plus Rider, which you can select while buying term life insurance from Max Life Insurance –
The term life insurance premium for Rs. 50 Lakhs life cover for a policy period of 40 years opted by a 30-year old, non-smoker male is around Rs. 6334. Including the waiver of premium, the rider will only increase the premium to Rs. 6556 approximately – a small jump in premium compared to the benefits you will get under this rider.
You can use an online calculator for term insurance comparison with or without this rider. Along with this rider, you can include the return of premium and critical illness riders with your base term life insurance plan.
Dig deeper into the process of buying the best term life insurance policy, and you will realize it is up to you to decide what benefits you would like the policy to offer. The selection of riders and other parameters like the sum assured and policy period impacts premium directly. Hence, you should be careful about the financial implications of life cover purchase as a whole. Stay wise, stay insured!
