Removing rider premiums

Sometimes, a person obtaining a life insurance may face a higher risk compared to others owing to factors, such as family history, health, occupation and so on. The life insurance company may meet the increased risk by charging an extra premium.

For example, an underground mine worker may be charged an extra premium to meet the extra risk his occupation entails.

Premium paid for an extra benefit is a called ‘rider premium’. It continues parallel to the benefit till the last day of the policy or till the stipulated date. But are you aware that this extra premium can be removed if there is a change in circumstances?

Health-related extra

For this, you should apply to the insurance company informing them that your health conditions have improved and the health extra premium must be removed. This application must be supported by an appropriate medical certificate.

Examples of some cases where an insurer like LIC removes the ‘health extra’ premium on submission of a certificate of cure from the surgeon are cataract, hernia, hydrocele, piles and lack of teeth.

The time from which the extra premium will be removed, however, varies. For instance, for cataract and piles, it will come into force from the next policy anniversary whereas for hernia, it will be removed only from the policy anniversary falling two years after submission of the certificate.

Occupation-related extra

Similarly, occupational extra, charged on the basis of the occupation of the policyholder can be removed if the nature of occupation changes. For example, a mine worker opts for office work at the mine and his employer allows it;a steel worker is transferred to the pattern–shop of the steel plant; a worker opts for voluntary retirement and thus quits the risky job, or a worker is out of employment by way of retirement, resignation, removal on merger/acquisition of companies or punishment.

A large number of people engaged as stunt performers, professional athletes, wrestlers, gymnasts, divers, acrobats, motor cycle performers, animal trainers, paratroopers, horse race jockeys, those working in the explosives industry or submarines and so on may be benefited by this when they change their occupation.

Experience shows that once the contract comes to an end, policyholders do not take a re-look at the cost and benefit of the policy. Unless you bring it to the notice of the life insurance company, it remains unaware of the need for a reduction in the premium. The onus of action, therefore, rests with the policyholder. A reduction in premium means a higher return on investment.

(The author is President, Society for Promotion of Legal and Insurance Awareness.)

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