Following the removal of Goods and Service Tax (GST) on life insurance premiums, individuals are upgrading their coverage by adding riders such as critical illness and waiver of premium for extra protection.
Rider attachment has grown to 30.9% in October from 29.6% in August and unchanged in September, data from Policybazaar show.
Buying a rider with the GST savings is a smart move compared to increasing the base cover of the term insurance. The premium for the rider is lower than the base price and it makes the cover comprehensive.
The critical illness rider offers a financial cushion at the time of a serious illness. It provides a lump-sum payout that supports treatment, loss of income and recovery expenses. Women who are purchasing term insurance are increasingly opting for critical illness riders with cancer screening features that offer long-term health security, says the Policybazaar study.
An industry expert says a critical illness rider ensures that cost never becomes a barrier to timely and holistic care. “For women balancing work, home, and caregiving, this rider offers essential financial protection and peace of mind,” she says.
How it works
The customer needs to first select a base life insurance policy and add the critical illness rider by paying an extra premium. “A combined coverage is more affordable than buying two separate policies like term plan and a critical illness policy,” says business head, Term Insurance, Policybazaar.com.
If the policyholder is diagnosed with any of the specific critical illnesses listed in the policy such as cancer, heart attack, stroke, kidney failure, major organ transplant, the insurer will pay out the full sum assured of the rider as a lump-sum amount to the policyholder.
While a standard health insurance policy will have limits on coverage, a critical illness rider acts as an extra layer of protection. This pay out acts as an income replacement fund which is a crucial financial safety net for the primary earners, co-earners and their dependents. The uptake of critical illness riders is high in metros and among younger salaried riders as this segment is more prone to lifestyle diseases and healthcare risks due to pollution, high stress level and sedentary habits.
Waiver of premium rider
It provides monthly payments to dependents after the insured’s death or waives premium payments if the insured becomes incapacitated. While the policyholder continues to enjoy the life cover, there is no obligation to pay premium. The waiver of premium rider is popular with child insurance plans.
This rider provides financial support if the policyholder faces critical illness or disability based on the terms of the plan. The rider is especially helpful for self-employed individuals when their income is interrupted due to a major illness.
Source from: https://www.financialexpress.com/money/use-gst-savings-to-top-up-basic-life-cover-with-rider-4052032/
