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Optional Benefits in Term Insurance

TeamAckoJun 19, 2024

Term insurance is a popular and affordable life insurance option that offers coverage for a specific period. While it is an essential component of financial planning, term insurance may not cover all the risks you and your family may face. This is where optional benefits in Term Insurance come into play. These optional benefits provide additional coverage that can enhance your policy coverage and provide financial security to your loved ones in case of critical illness, disability, or accidental death. In this article, we will explore the optional benefits in Term Insurance in India, how they work, and how they can provide comprehensive coverage





What is Term Insurance?

Term Insurance plan is one of the most significant forms of financial protection for the policyholder’s family as it provides a specific amount to the nominee, in case of the untimely demise of the policyholder. This policy is valid for a specified term and comes at an affordable premium rate. It is also a cautious method of long-term financial planning.

Features of a Term Insurance Plan

Some of the most important features of a Term insurance plan are as follows.

  1. Affordable plans

  2. Tax benefits

  3. Add-ons

  4. Easy to buy 

  5. Flexibility to receive payout

  6. Flexible premium payments

What are optional benefits in Term Plans?

An add-on also called a rider offers optional benefits at a low cost. These can be added to your Term Life Insurance Plan. Most insurers provide many add-ons at the time of the purchase or renewal of a base plan. In simple terms, optional benefits are a way to boost a Term Insurance plan. It helps the policyholder to not compromise on the financial security of the family even in his absence.

Advantages of optional benefits with Term Insurance Plan

Some benefits of add-ons/riders with a Term Insurance Plan are as follows.

Minimum management

Managing one policy with multiple riders is way more convenient than managing multiple policies. This applies to all the initial formalities of purchasing plans and then making premium payments towards each. In case of a payment default, one may lose all previously paid premiums or an additional fee might be charged depending upon the conditions of the insurer. To avoid such incidents, one basic plan with added riders can be purchased.

Tax benefits

The premiums paid towards Term Insurance policy along with riders are exempted from tax under Section 80C of Income Tax Act.Note: The tax benefits on life insurance are only tax free under the old tax regime. Payouts above Rs. 5 lakhs are taxable under the new tax regime for policies bought after April 2023.

Option to customise

Each individual has different financial needs and commitments. Therefore, one basic plan falls inadequate to meet such a wide variety of demands.

This is where the option to customise a plan is most beneficial.A good example can be a person who has a history of cancer in the family. An additional Critical Illness Rider can help him meet the financial challenges and costs in case he is diagnosed with cancer during the policy period.

He can meet all the medical expenses that come along, leveraging the basic death benefits as well in case he passes away.

Important optional benefits available with Term Insurance Plan

The Optional Benefits can help make a base plan more robust and comprehensive. These benefits that can be chosen at the time of the purchase of the policy. Some of the important add-ons/riders available with a Term Insurance plan are as follows.

1. Critical Illness Rider

In case of a Critical Illness rider, a lump sum amount is received at the time of diagnosis of an illness. The illnesses covered by this rider are listed in the policy document. Hospitalisation may not be necessary to avail benefits. Term insurance usually covers several Critical Illnesses like heart attack, cancer, stroke, amongst others.

2. Accidental Death Benefit Rider

Life is full of unexpected events. A basic Term Insurance plan will help you with the sum assured as a death benefit only. With an additional Accelerated Death Benefit rider, this compensation can be increased. In this case, the beneficiary is paid a supplementary sum assured in case the policyholder passes away due to an accident. This is a great way to provide an additional layer of financial security to your family in your absence.

3. Waiver of Premium Rider

Loss of income may be due to multiple reasons. This may result in an inability to pay the premiums of a policy. It can lead to the loss of death benefit. Waiver of Premium helps you with waiving off the premiums in case of loss of income or disability. The policy remains active even in non-payment of premiums.

4. Disability Rider

An unfortunate event like an accident can result in permanent or partial disability due to the loss of a body part or an impairment in body functioning. This might even result in a loss of income. This is where the Disability Rider can substitute the loss of income for the entire family. This rider can pay the policyholder an entire amount in the event of total disability and in case of partial disability, a partial sum assured is paid as per the terms of the plan.

5. Income Benefit Rider

This rider ensures a regular sum for a pre-established length of time after the death of the insured person. This helps your family with an income for several years in your absence. This is most advisable for the sole breadwinners of the family.

Factors that affect the premium of Term Insurance

Factors that affect the calculation of premiums for Term Insurance are as follows.

  1. Age

  2. Gender

  3. Sum Assured

  4. Smoking Habits

  5. Policy Term

  6. Medical Health

  7. Choice Of Riders 

  8. Occupation

Frequently Asked Questions

Here are some answers to the most asked common questions regarding optional benefits in term insurance


Can I change premiums in the future?

No, the premiums cannot be changed after the inception of the Term Insurance policy.

Can I add riders to my Term plan in the future?

No, most riders can only be added at the time of the purchase of the base plan or renewal of a policy.

Can I make payment for premiums online?

Yes, payment of premiums can be done online.

Can I buy multiple-term plans with riders?

Yes, you can buy multiple-term plans and add riders according to your choice and need.

Do I get death benefits and rider benefits if I survive the policy term?

Most Term plans only offer death benefits. Although the addition of some riders may help one attain survival benefits also. This will vary from one Insurer to another. 

Is it compulsory to add riders to my Term Plan?

No, the addition of riders is completely optional. It will depend on the requirements and expectations of the policyholder.

What kinds of deaths are not included in Term Insurance?

Usually, deaths due to natural calamities and sexually transmitted diseases are not included in Term Insurance. Please read the policy document to know more about exclusions.

Why do I need a Term Insurance plan?

Term Insurance is one of the best financial cushions that one can provide to his dependents. Even in your absence, your family will be able to sustain themselves and meet their financial requirements. It may even prove helpful in paying off any outstanding loans, mortgages, or any other payments.

Disclaimer: The content on this page is generic and shared only for informational and explanatory purposes. It is based on industry experience and several secondary sources on the internet, and is subject to changes.


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