There is nothing denying the fact that life insurance remains one of the most important financial planning tools for every individual who has dependent family members. Hence, it becomes important to invest in a life insurance plan sensibly, after doing intense research on various aspects and keeping various scenarios in mind. When planning to buy a life insurance policy, it is often observed that most people fail to understand the various elements that together make a life insurance cover, following which they end up investing in a wrong product. Apart from not understanding the right sum assured needed, they even fail to calculate the policy term and the add-ons that need to be purchased to make the term insurance policy much more comprehensive.
The most valuable product under life insurance is Term Insurance. The product comes minus the benefits of investment, maturity and surrender value, and the only advantage being death benefit that dependents of the insured receive upon death of the policyholder. As per the policy conditions, the entire sum assured is paid out to the nominee/beneficiaries in case of sudden death of the policyholder within the policy term that may be 20, 30, 40 or more years.
Making the Policy Much More Comprehensive
In order to make the policy much more comprehensive, the insurers allow the policyholders to attach add-ons or riders to the plan. These add-ons enhance the coverage and make sure that the dependents get maximum benefits on the death of the policyholder so that they do not suffer from any financial problems. The various riders’ available promise additional coverage to the insured under various segments that include Death, Disease and Disability. To enjoy additional coverage, the policyholders need to pay some extra premium to attach the add-ons to their term policy. Choosing the add-ons with your term plan may seem simple but it is really important to choose the right add-ons. You must select an add-on that rightly caters to your specific needs and requirements.
Accidental Death Benefit Rider
People involved in a profession that involves great risk or a profession that involves too much driving must make their term plan much more comprehensive by adding Accidental Death Benefit rider to it. Accidental Death Rider is one of the common riders provided by most of the term insurance companies. By opting for this rider, a policyholder gets the extra amount in lump sum or monthly income whichever way the policyholder thinks are best for the dependents. The premium of the accidental death benefit rider completely depends on the total sum assured. These riders typically end once the insured person reaches age 70.
Apart from the Accidental Death Benefit Rider, another important rider in which one must be covered is accidental disability rider. In this cover, if the policyholder becomes disabled as a result of an accident, the insurer offers income to the diseased for a specific period according to the terms of the policy. The policyholder can also choose to take benefit as a lump sum amount that can act as an income replacement benefit.
An accidental death benefit generally covers any death that occurs due to an accident. It typically excludes incidents like acts of war and death caused by illegal activities, etc. Hazardous hobbies, in which the insured regularly engages, are generally specifically excluded, as well. In the case of a fatal accident, death usually must occur within a period specified in the policy.