Things to Keep in Mind When Adding Riders to Your Life Insurance


When you buy a life insurance policy, you will come across several terms and components. It is important to understand the meaning of these components so you can make an informed decision regarding your policy purchase. One of the terms that you will come across is ‘rider’. Read further to understand what riders are and the factors to keep in mind while adding them to your life insurance plan.

Understanding the meaning of riders

When you are understanding what life insurance has to offer, you will come across the term riders. Riders are the additional benefits that you can buy along with your base life insurance plan. These riders are optional benefits that you can add by paying additional premiums. There are several rider options that a policyholder can choose from depending upon their needs. The common riders are critical illness riders, accidental death riders, permanent disability riders, income benefit riders, and waiver of premium riders.

A rider is an effective way to enhance the protection that you get from your life insurance plan. It allows you to be more secure and prepared for any uncertainties that may arise in the future.

The additional premium that you must pay when you choose rider options is usually quite affordable. You can use a life insurance premium calculator to get an estimate of the additional premiums you need to pay for the riders you choose. The coverage tenure and amount of the riders you choose cannot be more than the coverage tenure and amount of your base life insurance plan.

You can add several riders to your base life insurance depending upon your requirements. If you are confused regarding the selection of riders, read further. Below are mentions of the factors that affect your selection of life insurance riders.

Factors to consider while selecting riders for your life insurance policy

When you are browsing through different life insurance plans, it is important to keep in mind that you are taking a long-term financial decision. A life insurance policy directly impacts you and your loved ones. When you are contemplating which riders to select with your base policy, here are some factors that will help you to narrow your choices:

  • Take your income and expenses into consideration

Your finances evolve depending upon the changes in your long-term and short-term expenses. The purpose of the riders is to provide additional financial security to the policyholder. However, it is essential to choose realistic riders. When you add riders to your base insurance plans, you also have to pay additional premiums. Ensure that you choose the coverage amount and number of riders considering your finances. It ensures that over the years, you can pay your premiums with ease.

  • Know your health condition

Your health is one of the main factors that determine the premium amount of different life insurance plans. Since there are several lifestyle conditions and diseases that directly impact your quality of life, choose the riders that are appropriate based on your health and even your family history, if needed. Your insurance provider may ask you to undergo a medical examination to know your exact health conditions.

  • Find the tax implications

A life insurance policy offers tax benefits on multiple levels. When you choose riders along with your life insurance plan, your premium increases. Along with the base plan, the premium of the riders is also added. You can get an estimate of the premium amount by using a life insurance premium calculator. The premiums that you pay are subjected to deductions as per Section 80C of the Income Tax Act. The deduction limit of the section is Rs 1,50,000 annually. This deduction is only applicable for individuals who have opted for the old tax regime. Section 80C deductions are not applicable for those who are paying tax under the new tax regime.

  • Assess your coverage needs

Choosing the right amount of coverage is crucial, be it for your base plan or your rider. With an insufficient rider amount, your coverage needs may not be met. This would cause problems when you need financial cover in tough times. Take your needs and your finances into consideration to get an estimate of the coverage you require for the rider you choose.

Knowing what life insurance offers makes it easier to narrow your choices. When you are adding riders to your base plan, read the fine print carefully. Ensure that you are well aware of the inclusions and exclusions before buying your policy.