What is Health Rider in Life Insurance?

Definition:

Health riders in life insurance are additional coverage options that can be added by the policyholder to their base life insurance policy. These riders enhance your plan by offering extra protection against health-related risks. These riders are cost-effective when compared to buying multiple policies for specific medical conditions.

Contents

• Key Takeaways:
• How do Health Riders Work in Life Insurance?
• Common Types of Health Riders in Life Insurance
• Difference Between Life Insurance Riders
• Why Riders Matter for Policyholders
• Bottom Line
• FAQs

Key Takeaways:

• Boosted Coverage: A health rider is a general term that refers to any add-on related to health. It can include multiple types of riders, like Critical Illness Rider, Accidental Disability Rider, Hospital Cash Rider, Surgical Care Rider, etc.

• Financial Protection: Upon diagnosis or occurrence of the covered event, they provide financial relief in the form of a lump-sum payment for medical expenses, loss of income, 

• Affordable: They are an affordable way to increase coverage when compared to purchasing a whole new separate policy. 

• Customisation: They allow policyholders to customise their coverage based on their specific needs and risk factors.

How do Health Riders Work in Life Insurance?

Health riders are optional add-ons to your life insurance policy. They offer financial cushioning in case of critical illness, hospitalisation, accidental disability, or major surgery. They provide additional coverage against emergencies without the need to buy a separate health insurance policy.

Here's how a health rider typically works:

Step 1: You can choose to add a health rider when purchasing a life insurance policy or sometimes during renewal. It could be a critical illness rider or surgical care rider, etc.

Step 2: Remember that adding riders will increase the overall premium you pay for your life insurance policy.

Step 3: Activate the rider option once an event or condition under the rider’s terms has occurred. For example, if the policyholder is diagnosed with one of the covered illnesses in the critical illness rider (e.g., cancer or heart attack), this rider is activated.

Step 4: To activate, the policyholder must inform their insurer and provide the relevant diagnostic reports.

Step 5: Wait for approval. Once the claim is verified, the insurer will pay the benefit according to the rider’s terms and conditions mentioned in the policy.

Common Types of Health Riders in Life Insurance

Health riders in life insurance provide various flexibility and coverage choices. Below are some of the common options available in the market: 

• Critical Illness Rider: This gives a policyholder a lump sum payment they can access once they have been diagnosed with a critical illness, such as a heart attack or cancer.

• Disability Rider: This will provide an additional payment if the policyholder is partially or totally disabled due to an accident that impacts the ability to earn.

• Hospital Cash Rider: It offers a fixed daily cash allowance if the policyholder is hospitalised due to illness or injury. Some plans may offer higher cash amounts when the policyholder is admitted to the ICU or for longer days in the hospital as part of the benefit.

Legal Aspects

• Health riders are regulated by IRDAI.

• The benefits of the health riders and the conditions will be clearly stated under the policy document by the insurer.

• Riders can be purchased at the time of buying the policy or during renewal, as per policy rules.

Real-Life Example

Varsha has life coverage worth ₹50 lakhs and a critical illness rider worth ₹10 lakhs. After being diagnosed with cancer, she receives ₹10 lakh under the rider to cover her treatment. Her main policy remains active, and payout will be triggered only as part of the rider benefit.

Difference Between Life Insurance Riders

Here are some common types of life insurance riders and their differences: 

Why Riders Matter for Policyholders

Riders add customisation and flexibility to your life insurance policy, allowing you to enhance coverage without buying separate plans. Whether it’s a critical illness, accidental disability, or waiver of premium, riders offer targeted protection for real-life risks that a basic policy may not fully cover.

By choosing the right riders:

• You strengthen your financial protection

• Avoid the cost and complexity of maintaining multiple insurance plans

• Ensure better support during medical or accidental emergencies

Bottom Line

Riders are crucial life insurance add-ons that enhance your insurance policy by offering tailor-made protection against certain specified risks. Unpredictability of certain events in life, such as accidents, critical illnesses, or sudden disabilities, can derail your finances. Riders provide much-needed financial support in such situations. Remember to talk to your insurer about what fits your needs and then make a decision before buying a policy.

FAQs

Below are some of the frequently asked questions on Health Rider in Life Insurance

What is a rider on life insurance?

A rider is an extra feature you can add to your life insurance policy to get additional protection. It’s like a top-up that lets you customise your policy based on your needs, whether it’s for critical illness, accidents, or other specific situations.

Do health riders have a different claims process?

The claims procedures for life insurance base policies and riders are similar but not dependent upon each other. However, for riders like critical illness, you may have to submit all medical proofs relevant to the claim.

Can I add a rider after purchasing a policy?

Riders are optional and can be added at the time of purchasing or renewing your policy.

Are premiums paid towards riders tax-deductible in India?

Premiums paid towards health riders can qualify for tax benefits under Section 80D of the Income Tax Act, whereas premiums paid for a base life insurance fall under Section 80C.

Do riders come at an additional cost?

Yes, riders will have an additional premium (aside from the base policy premium).

How many types of riders are there in insurance?

Depending on your needs, you can choose from quite a few riders. Some of the most popular ones include critical illness riders, accidental death benefit riders, permanent disability riders, and waiver of premium riders. 

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