So after
deciding the policy and the payment term, you proceed ahead, enter your basic
details and now comes a page asking you to select add-ons. Sounds a way how we
order in ice-cream parlor. And just like ice creams some add-ons are good and
other are not so much.
So let’s start
on them.
What are Add-Ons?
These are
toppings to your plain vanilla ice-cream or insurance. These may either make
your term insurance comprehensive or complex depending upon what you add on. Of
course, you need to pay extra for these add-ons.
Some of the popular and most common add-ons are :
1. Return of Premium : Under this rider, all the premiums paid will be returned on surviving the policy term. Do note that there will be no interest paid on this, and just the total premiums paid will be paid back. While, this may sound good, do consider the time value of money. If you pay, Rs.15000 for a policy for 30 years, after 30 years you will receive 4.5Lacs. What will Rs. 4.5Lacs be worth after 30 years? I will never recommend anyone to buy this. The extra premium that this add-on entails will grow on to a bigger sum if invested for 30 Years.
2. Critical Illness Rider : This rider pays a lump sum if the insured person is treated with any critical illness. This is one of the most complicated riders, as each company has a different list of diseases, then there’s a clause saying ‘extent of disease’, which a non-medical person will never now. However, this is an important rider, as diseases like cancer, heart attacks, while being covered under medical insurance, have many associated expenses, which may not be covered after hospitalization ends. Do check your and your family’s medical history to opt for this rider.
3. Accidental Death : Another useless rider, this one pays out additional amount to the nominee if the death happens due to an accident. Either a person has sufficient insurance cover or not. If he has, then why an additional sum is needed in case of an accidental death and if insurance cover is not adequate, overall cover should be increased.
4. Disability Rider : So, term insurance will pay one’s family in case insured person is not there. But what a person doesn’t die but losses the ability to work. This rider covers one of the most important aspects of a family’s financial security. If the insured person doesn’t die but loses his eyes or limbs or voice, the rider will give a payout depending upon nature and extent of disability. This amount will assist the family in case the person is not able to continue to work. Thus, this is a must have rider that should be taken.
To Consider or Not to Consider?
Yes, definitely
yes to disability rider and definitely no to return of premium and accidental
death benefit rider. Critical illness rider, as I mentioned earlier is a
complicated one. You need to consider your lifestyle, your family’s medical
history and your current health insurance amount and coverage to arrive at the decision
of purchasing this add-on.
Tips to buy Add-on:
1. Do compare the stand alone critical and disability policies from general insurance companies before choosing an add-on.
2. Choose a sufficient amount for add-on, a lump sum payment of Rs.10 Lacs may not be of much help in case of a disability.
Buying insurance is an extremely personal subject and the needs and each person’s requirement is different. Write down your requirements, if possible, discuss it with your dependents and then go to comparing prices. Just like buying an ice-cream. The cheapest plan may not be such a good idea as it may leave your family’s financial future open to risks.
Do share your insights with us on our email or message us @Money.Matrs.
To invest in
equities, bonds and other instruments, you can open a demat account with Upstox
by clicking here.
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purchase direct mutual funds through KUVERA, click here to signup.
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