We understand term plan as a life insurance policy that offers a sizeable sum assured value to the nominee in case the insured happens to meet unfortunate death during the policy term. But there is more to it and an individual can benefit from the different available riders or add-ons with term insurance. Here's a quick check on all such riders:
1. Term Plan with Return of Premium Plan or TROP:
Typically term plan is a pure insurance product which comes with no investment or maturity benefits. However, when you opt for TROP or Term plan with Return of Premium option, if you survive the policy term which can be between 10-40 years, aggregate of premiums paid by you shall be returned on the maturity of the policy.
2. Monthly Income Rider:
This rider of monthly income with a term plan will provide nominees with a certain sum over and above the sum assured value on a monthly basis. Usually this is decided as a fixed percentage of the sum assured value. The add-on also provides increasing income source which means at the end of every year monthly pay-out or income to the nominee increases by some fixed percentage.
3. Premium Waiver Rider
Though term plans are low cost insurance products, still some of them offer premium waiver option in a case when the insured is diagnosed with some critical or terminal illness or when he suffers disability due to an accident. The policy shall remain in force until the maturity term and you will be waived off from future premium payments. It is suggested to opt for this must-have rider if it is not in-built with the term plan.
Cost: A person aged 30 years opting for a life cover of Rs. 1 crore for a policy term of 35 years will need to dole out an additional sum of Rs.400-600 on an annual basis for this rider.
4. Accidental disability or death rider: Accidents in life are unfortunate and at the same time unpredictable. You can secure yourself and your family against any such event by opting for a accidental disability or death rider that offers a lump sum pay out to youor nominees over and above the sum assured value.
Cost: For an individual aged 30 years taking a life cover of one crore with a policy term of 35 years, Rs. 300- Rs. 500 shall be payable annually for a cover between Rs. 10-30 lakh.
5. Critical Illness Riders : For any of the pre-listed critical medical conditions in the term plan, insured can be offered a lump sum payment in case he is diagnosed with any such disease. It is to be noted that pre-existing medical illness is not covered under the plan.
Cost: For an individual aged 30 years taking a life cover of one crore with a policy term of 35 years, this rider shall be available for a sum of Rs. 5000-Rs. 10000 payable annually for a cover of Rs. 25-50 lakh. It is to be noted that critical illness rider is the most expensive.
6. Terminal Illness rider: Term plan policyholder can also avail the terminal illness rider which can come in handy in case he is diagnosed with some terminal ailment. With it, insurer provides either a part or entire sum assured value to the policyholder.
The cost of the rider varies from insurer to insurer. However as per the IRDA, cost of rider premium cannot exceed 30% of the basic insurance value.