A rider can help expand your insurance coverage

If you want to increase the coverage of your life insurance policy so that a higher sum insured is paid in case of eventualities like disability or death due to an accident, then going for the disability and accidental death rider with a term insurance policy or a personal accident policy along with a term insurance are suitable options.

A personal accident policy, offered by general insurance companies, is suitable for those who are adequately covered by a separate term insurance policy to take care of natural as well as accidental death. The disability rider is suitable for policyholders who want the convenience of paying only one yearly premium towards life insurance and riders. An accident policy works as a standalone policy and provides coverage up to the sum insured for accidental death and accidental disability.

A term insurance on the other hand, provides the sum insured in the event of the policyholder's death, however, there is no provision for the sum insured to be paid in the event of disability. Hence, taking a disability rider on term insurance allows a policyholder to claim the sum insured for physical disability due to an accident.

In addition, an accidental death rider on term insurance allows the nominee of the policyholder to claim the total sum insured in term insurance, along with the sum insured for the accidental death rider.

“Personal accident policies offered by general insurance companies are more or less the same with the accidental death and disability riders. However, some term insurance disability riders exclude temporary disability, which is covered in a personal accident policy,“ said Sanjay Datta, head of customer service at ICICI Lombard General Insurance Company.

The premium for a 30year-old person choosing a 20-year term insurance with coverage of Rs 5 lakh has to pay Rs 495 for an accidental death benefit rider and Rs 248 for a permanent disability rider from Kotak Mahindra Old Mutual Life Insurance. Similarly, Max New York Life Insurance Company will charge Rs 675 for an accidental death rider and permanent disability rider combined together. The policyholder must, however, take a base term plan for these riders. Typically, a term insurance policy from Kotak Mahindra for the same person will cost Rs 3,119 with coverage of Rs 15 lakh. The whole policy package with riders will entitle the policyholder to receive Rs 15 lakh in the event of natural death, Rs 20 lakh in case of accidental death and Rs 5 lakh in case of total physical disability.

On the other hand, a 30year-old person opting for Rs 5 lakh coverage on a personal accident policy will have to shell out Rs 589 for Royal Sundaram Accident Shield policy and Rs 650 for Bajaj Allianz General Insurance Company’s Personal Guard policy. These policies will pay the sum insured of Rs 5 lakh in case of accidental death or permanent total disability of the policyholder. Also, a policyholder is eligible to claim a certain fixed sum insured depending on his policy terms if he suffers from temporary or partial disability. “The sum assured is also payable on account of disablement coverage (permanent or partial). However, the exact percentage payable will be determined based on the extent of disability and that varies from insurer to insurer. Like in our case, we pay 50 per cent of sum insured if the person becomes incapable of speech or loses hearing capability in both ears,“ said Arun Mehrotra, head of retail underwriting and product development at IffcoTokio General Insurance Company.

“General insurers offer features like accidental medical expenses, ambulance charges, and education fund, which are not available in life insurance riders. So, depending on the policyholder's needs, he can choose the product and insurer that best suits him,“said Antony Jacob, chief executive officer of Apollo Munich.

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