Financial Daily from THE HINDU group of publications
Sunday, Dec 08, 2002
Financial Daily from THE HINDU group of publications Sunday, Dec 08, 2002 |
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Investment World
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Life Insurance Money & Banking - Life Insurance Industry & Economy - Investments Riders in insurance policies Nath Balakrishnan
RIDERS are add-ons to the basic insurance policy to supplement the cover provided. One can also combine a set of riders and append it to the main policy. The premiums will, obviously, undergo an upward revision, depending on the rider or a combination of them chosen. Let us look at some of the riders available.
Accidental death benefit
Should the insuree die during the tenure of the policy, this rider ensures receipt of a sum over and above the basic sum assured. The companies concerned determine the maximum amount that can be paid out under this rider, subject to certain limits. Related to the above benefit is the permanent accidental total/partial disability benefit. The nature of the disability determines the extent of the payout, over and above the basic sum assured. The payout is either in the form of an annuity or as a lumpsum. Even after a claim has been settled against this rider, the other policy benefits will remain. Another connected benefit is the "waiver of premium" rider. Should a permanent disability affect the insuree's capacity to earn, this rider waives all premium payments. The term benefit rider endeavours to provide an additional sum, equivalent to a maximum of the basic sum assured should the insuree die during the tenure of the policy. Companies also offer a critical illness benefit. Should the insuree be afflicted by any of the critical illnesses, as listed by the company offering this rider, he stands to receive a compensation. However, once a claim on this ground has been entertained, additional claims on the same ground cannot be made at a subsequent date. The other riders offered are the major surgical procedure and the hospitalisation benefits. The former entails a payout, depending on the surgical procedure; the latter covers the expenses involved in hospitalisation by paying room charges subject to certain ceiling on both the amount and the number of days in a year that the insuree can avail of the benefit. Combined, these riders provide the insuree the latitude to customise a policy to one's needs. However, one should also strive to strike a balance between the financial benefits and the cost of the policy.
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