How to buy a fully loaded term insurance plan

When it comes to comprehensive life coverage at affordable costs, a term insurance plan is the preferred choice of many. A term plan is typically a pure insurance plan with no investment benefits, surrender value, or maturity benefit. It pays out a sum assured in case the insured person passes away. A typical term plan has a tenure ranging from 5 to 30 years. Also, most term plans provide you the option of availing add-ons and riders. These enhance the benefits provided by the plan at a marginally higher cost. With the market full of dozens of term insurance products each with its own set of riders. How do you decide what’s best for you? Let’s examine some of the common riders you can avail with your new term plan.

CRITICAL ILLNESS RIDERS
A critical illness is a health problem that can be fatal and may require extensive treatment. Some such problems are cancer, stroke, and heart attack. Treating such health problems can be hard on your wallet. A critical illness rider with your term plan helps you ride over the financial distress of treatment of critical illnesses. The cover will pay for your medical bills within the cover limit. If the insured person dies, the term insurance will pay the sum assured to the dependents of the insured. If the insured has a chance of getting a specific hereditary critical illness, then he must get a critical illness rider. It is essential to go through the list of illnesses that the policy rider covers. Usually, the policyholder must wait for a year to get the full benefit of the critical illness rider. The policyholder is required to disclose pre-existing illness (if any) before taking this rider.

ACCIDENTAL DEATH RIDER
Here, the insurance company pays an extra lump sum amount apart from the basic sum assured under the term plan. The accidental death cover premium depends on the amount of sum assured. Another rider which may be covered under accidental death cover is accidental disability cover. If the accident results in disability, the insurance company provides income to the diseased for a period as per the terms of the policy document.

TERMINAL ILLNESS RIDER
Many people get confused between terminal illness and critical illness. A critical illness may be treatable. However, a terminal illness is a disease that is certain to cause the insured person’s death. For example, last-stage cancer. The death may happen in a few days or months. Regardless, once the insured is diagnosed to be terminally ill, under the terminal illness rider, his insurance provider will pay out the sum assured without waiting for his death. Some insurance companies may provide this rider at no extra cost.

WAIVER OF PREMIUM
To get the full benefit of any insurance policy, the insured must pay his annual premium for the whole tenure of the policy. If a premium is missed, the policy will lapse. Fortunately, the waiver of premium rider can take care of it. This rider enables the insurance policy to remain in force even if the insured is not able to pay it due to critical illness, permanent disability, or an unforeseen emergency. The insurance company pays or waive off the premium to keep the policy active.

ASSURED MONTHLY INCOME RIDER
This rider can pay a monthly income over and above the basic sum assured to your nominees. This income is either fixed or increasing, and it is available for a fixed number of years. For example, one term plan provides a monthly income equal to 0.4 per cent of the basic sum assured for 10 years. Another policy provides an increasing income option where the monthly income increases by 10 per cent at the end of every year for 10 years.

Remember that choosing the right riders is as crucial as selecting the right basic coverage. Depending on your risk exposure, you must avail the appropriate rider with your term plan. While choosing a term plan, always check the different types of riders available with it, and compare the cost with insurance products of other companies with similar riders.

—The writer is the CEO of BankBazaar.com