Top up your policy with the right riders: CEO and MD of Max New York Life Insurance:: Business Line,

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I am often quizzed by friends who are not in the insurance business on how insurers never have offers on policies, the way there are on credit cards or loans. We are easily drawn by the ‘more for less' signage at stores, be it when buying books, shirts or even ordering food at a fast food joint.

Such deals often lead us to indulge on a third book that we may never read or a shirt that one doesn't fancy. Maybe that is why insurers do not offer deals.

TOPPINGS ON A POLICY

But that does not mean life insurers do not offer ‘more for less'. The riders offered with insurance policies are one such life insurance offering.

This feature when attached to a policy enhances the scope of the life insurance cover. Simply put, riders are options that allow you to increase your life insurance cover, qualitatively and quantitatively.

You can compare riders to the toppings you add to your pizza in order to elevate its taste. And as with toppings, riders are entirely optional and are available in a variety of flavours, to be mixed and matched according to one's preferences. And each comes with a small additional cost. Riders are one of the most customer-friendly clauses introduced with a life insurance policy.

CUSTOMISED FOR YOU

For a small additional cost, riders allow you to customise your policy to match your needs as they cover risks that are fairly unique to an individual. And the premiums on riders are low because they don't have to factor in the costs such as underwriting expenses and set-up charges.

Riders are pure protection products and thus no bonus is paid on them. In short, riders provide low-cost pure risk cover while offering choice.

WHERE RIDERS COME IN

For instance, if the sole breadwinner in the family meets with an accident, resulting in temporary disability. If it forces him to stay away from work during the period of recovery, the life cover will not make good the loss of income.

This is where a personal accident rider covering temporary disability could come to the family's rescue.

The policy provides monetary compensation to the insured, subject to the terms and conditions mentioned in the insurance contract.

Similarly, for a policyholder diagnosed with a critical or terminal illness, the life insurance cover can provide little relief as it is not capable of preventing the drain on finances during the treatment.

A dread disease rider could come in handy in such times.

The illnesses generally covered under this rider include cancer, kidney failure, paralysis, bypass surgery, major organ transplant and so on.

The sum assured under the rider is paid upfront as a lump-sum to the policyholder. Therefore, even if you have a health insurance policy in place, this amount can help meet other expenses or act as succour if the insured is unable to resume work during the period.

OTHER OPTIONS

There are several other options such as a ‘level term cover' rider which provides you the option to increase your risk cover for a limited period and offers death benefit alone, and addresses a need for extra protection for a specified period, such as a time when you're carrying large debt and wish to insulate your dependents.

There is also the ‘waiver of premium' rider which gets activated in the event of a person becoming completely disabled or losing his livelihood because of unemployment owing to an injury or sickness.

In that case, the premiums due on the base policy (and other riders, if any) are waived till the person is able-bodied and employed again. There are also riders that guarantee future insurability or riders that allows you to be part of future bonuses and more.

This means that using these features, you can enhance your life cover, qualitatively and quantitatively, and bring it in line with your needs.

While these are all add-on benefits with a life insurance policy; riders offer great value to the policyholder at a marginal cost which is a lot more than the freebee that one gets at a sale.

Riders, when used in the right way, will let you get the most bang for your life insurance buck.

Find the riders useful? Go on, call up your life insurance provider to add additional flavour, through toppings, to your life insurance.

(The author is CEO and MD of Max New York Life Insurance)