Term insurance add-ons are optional benefits that you can attach to your base term insurance plan to cover specific scenarios or risks not covered by the base plan. For example, you can include a critical illness add-on to your term insurance plan that will pay you a lump sum if you are diagnosed with a critical illness such as cancer, heart attack, or kidney failure. Let’s discuss the benefits of this product and the factors to consider when choosing one.
Benefits of Term Insurance Add-Ons
Term insurance add-ons can provide several benefits that make your term insurance plan more comprehensive and valuable. Some of the benefits are as follows:
- Extra protection: Term insurance add-ons can cover you for specific scenarios or risks that are not covered by the base plan, such as accidental death, critical illness, disability, or long-term care. This way, you can ensure that you and your family are protected from any unforeseen events that may affect your health or income.
- Increased payout or benefits: Term insurance add-ons can increase the payout or benefits for you or your nominee in case of the insured event. For example, an accidental death benefit add-on can provide an additional sum assured to your nominee in case of your accidental death, over and above the base sum assured. Similarly, a critical illness rider can provide you with a lump sum amount to cover your medical expenses in case of diagnosis of a critical illness without affecting the base sum assured.
- Reduced premium burden: Term insurance add-ons can reduce the premium burden or extend the policy term in case of disability or illness. For instance, a waiver of premium rider waives off the future premiums in case of your disability or loss of income while keeping the policy active and the coverage intact. Likewise, a return of premium rider can return the paid premiums at the end of the policy term if you survive, effectively making the policy free of cost.
- Flexibility and customisation: Term insurance add-ons can offer flexibility and customisation to suit your needs and preferences. You can choose the add-ons that match your risk profile, financial goals, and budget. You can also add or remove the add-ons later, subject to the terms and conditions of the insurer.
Factors to Consider When Choosing Term Insurance Add-Ons
Some of the factors are:
- Age and Lifestyle: If you are young, healthy, and have a low-risk lifestyle, you may not need many add-ons as your chances of facing an accident, illness, or disability are low. However, you may need more add-ons to cover the potential risks if you are older and have a pre-existing condition. Similarly, if you have a family history of certain diseases or conditions, you may want to opt for the relevant add-ons to protect yourself and your family.
- Financial goals: Suppose you have a large loan or debt. In that case, you may want to add a waiver of premium rider or an income benefit rider to ensure that your policy does not lapse and your family does not face any financial burden in case of your death, disability, or loss of income. Likewise, suppose you have a spouse, children, or parents who depend on your income. In that case, you may want to add an accidental death benefit rider or a critical illness rider after using a term insurance calculator to provide them with extra financial support in case of your death or illness.
- Cost and affordability: Compare the cost and benefit of the add-ons and choose the ones that are affordable and worth the value. Avoid buying unnecessary or overlapping add-ons that may increase your premium without providing any significant benefit.
- Compatibility: Term insurance add-ons are attached to the base term insurance plan and are subject to the same terms and conditions as the base plan. Before buying them, read the policy documents and understand the fine print of the add-ons and the base plan.
- Claim settlement process: Term insurance add-ons are meant to provide financial security and peace of mind in case of an unfortunate event. However, if the insurer’s claim settlement process is complicated, delayed, or disputed, you may not benefit from the add-ons when you need them most.
Conclusion
In summary, term insurance add-ons can enhance your coverage and give you more peace of mind and financial security. However, not all add-ons are suitable for everyone. You need to carefully evaluate the features, benefits, and costs of the add-ons before buying them.
