Insurance Rider
Full form: Rider / Add-on Cover
InsuranceA rider is an optional add-on to a base insurance policy that provides additional coverage for an extra premium. Popular riders on term plans: accidental death benefit, critical illness, waiver of premium, disability income, and accidental permanent disability.
In detail
Most useful riders for Indian consumers:nAccidental Death Benefit (ADB): additional sum assured if death is accidental. Cost: Rs 300-600 extra for Rs 50L additional cover. Good value.nCritical Illness (CI): lump sum on diagnosis of specified illnesses (heart attack, cancer, stroke). Very useful given high healthcare costs.nWaiver of Premium (WOP): if you become disabled, future premiums are waived and policy continues. Excellent for sole earners.nDisability Income: monthly income if disabled.nnAvoid: return of premium rider (adds 30-40% to premium for a benefit that nets you negative real return).
Formula
Real-life example
Ravi's base term plan: Rs 1 Cr for Rs 9,800/year. Adds ADB Rs 50L (Rs 420/year) + WOP rider (Rs 650/year). Total: Rs 10,870/year. If he dies in an accident: nominee gets Rs 1.5 Cr. If he becomes disabled: no more premium payment, Rs 1 Cr cover maintained for free. Excellent value at Rs 1,070 extra.