Insurance Uncovered

The following are the frequently asked questions on riders which come with life insurance policies

Why should I purchase a rider?

Riders provide extra insurance cover/benefit on payment of additional premium without having to take a separate policy. Different riders can be added to the basic policy according to your needs and coverage requirements.

When will the riders get terminated?

The riders get automatically terminated in case of discontinuance of the basic policy. It may also get terminated when it is a benefit rider and the benefits gets paid or an insured event has occurred.

Are there any restrictions on coverage amount, premium and number of riders I can have?

There are no restrictions on the number of riders you can add to a basic policy. However, in no case: the premium relatable to health-related or critical illness riders, in case of term or group products, shall exceed 100 per cent of premium under the basic policy. All other riders together shall be subject to a ceiling of 30 per cent of the premium of the basic policy. Any benefit arising under each of the riders shall not exceed the sum assured under the basic policy.

When can I add a rider to my basic policy?

Generally, insurers offer to add the rider at the time of taking the basic policy. However, some allow adding the riders at a later date as well. Depending on the terms of the rider, insurers may allow to get out of the rider coverage. In such an event, the future premium payable will then simply be equal to the basic policy premium, excluding the rider portion.

Can I have a rider without a basic policy and what are the tax benefits under riders?

A rider can only be offered as an add-on to the basic policy. Now, tax benefits on premium paid towards riders are similar to the basic life insurance policy. Premiums paid towards all riders (other than health and critical illness) get tax benefits under Section 80C. Health and critical illness riders get tax benefits under Section 80D. All rider benefits, when received, are exempt from tax under Section 10 (10D). However, the tax laws are subject to change and will be applicable as per the laws prevailing on the date of delivery of service by the insurer.

Source: IRDAI

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