More cover against misfortune

Optional riders and add-ons are important to ensure you derive the full benefit of an insurance policy.

Choosing the right insurance plan is one of the most crucial decisions one needs to make in life. You must take time and explore well before buying a term life policy and a health insurance plan as it is very important to opt for the right coverage. At the same time, it is equally important to know about the optional riders or add-ons that make the policy much more comprehensive.

The prime purpose of choosing a rider or add-on along with your term and health policy is to enhance the protection provided by the insurer and provide a cover against a specific risk. The right choice of add-ons and riders can significantly help you and your family at the time of making a claim.

Based on specific requirements of policyholders, insurers give the option of customising policies with add-ons and riders. They are basically like accessories that can be attached to the main insurance cover to enhance its overall value and functionality. They are bought along with the basic policy.

Health add-ons: OPD cover

In India, out-of-pocket healthcare expenses account for more than 62% of total medical expenses. Considering this, it is very important to have an OPD cover rider in the health insurance policy as it takes care of the outpatient department (OPD) expenses of the insured. Some major expenses covered under this head include pharmacy bills and consultations.

Hospital cash benefit

Under the rider, the insured receives a fixed cash benefit in the event of hospitalisation. Regardless of the healthcare expenses borne by you, the hospital cash benefit rider helps you with a daily cash benefit. For instance, assume you have a rider that pays ₹1,000 per day in case of hospitalisation.

Now, whether your per day hospitalisation bill amounts to ₹1,000 or ₹2,000, the rider will pay you for the pre-decided figure, i.e. ₹1,000. If the hospitalisation entails admission into an intensive care unit (ICU), the insured is eligible for twice the daily cash benefit. Moreover, the insured is even eligible for a lump sum benefit in case of an extended surgery for any specific medical condition.

Cancer care plan

It is important to have a disease-specific rider added to your health insurance such as a cancer care plan that provides a cover beyond in-patient hospitalisation. The total cost of treatment in India may cross ₹15 lakh in some cases.

Such plans provide an immediate lump sum amount irrespective of the expenses incurred on the actual medical treatment.

As per policy terms, 50% of the total sum insured is paid during the early stage of the disease along with an additional payout of 100% during major/advanced stage. The plan demands a survival period of seven days.

Term riders: Critical illness

Some major critical illnesses such as cancer and kidney failure can surely wipe out a person’s finances if there is no adequate cover in place. For all such situations, it is best to have a term plan with a critical illness (CI) benefit as a rider. Under the CI rider, on diagnosis of a particular critical illness, the policyholder is provided with a lump sum benefit up to the entire sum assured.

Waiver of premium rider

This rider keeps the term insurance plan active even if the policyholder is not able to pay the premium due to an unexpected event such as partial or complete disability of the policyholder due to an accident.

The rider waives the premium, but the policy remains active until the end of tenure and it reduces your financial worry of paying future premiums.

The policy is best suited to those with a risky lifestyle.

Accidental death rider

In India, over 1.5 lakh people die each year in road accidents. These numbers are higher than in most developed auto markets across the globe, including the U.S.

However, roads are just another example of sites at which accidents often happen; construction sites, homes, and other potentially safer places witness accidental deaths, as well. Under this rider, the nominee is given an additional sum assured when the policyholder dies due to an accident. The sum assured provided to the policyholder is different from the death benefit.

For instance, assume someone bought a term plan with ₹1 crore sum assured along with an additional accidental death benefit rider of ₹20 lakh. In case the policyholder dies due to an accident, dependents will receive ₹1 crore sum assured from the term plan and ₹20 lakh from the accidental rider death benefit taking the total amount to ₹1.2 crore.

(The author is Health Business Head, )

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