When it comes to life insurance plans, the Life Insurance Corporation of India offers every type of life insurance plan. It has traditional life insurance plans which provide guaranteed savings for future financial requirements as well as unit-linked insurance plans which give customers the benefit of market-linked returns. There are child plans and pension plans also which cater to specific financial goals. Besides the variety of life insurance plans, LIC also offers riders which help to give you extra coverage under a basic plan.
Let’s understand riders and the types of riders offered by LIC –
What are riders?
Riders are additional coverage options which are available with life insurance plans. When buying a life insurance policy you can opt for riders by paying an additional premium. The opted rider would provide coverage against a specified eventuality. If the contingency, which is covered by the chosen rider, occurs during the policy tenure, the rider benefit is paid.
Salient features of riders
Life insurance riders have the following salient features –
- Riders are optional in nature and can be selected when buying the policy
- An additional premium is paid for each rider that you select. However, the premium rate is very low
- You can select as many riders as you can provide that the total rider premium does not exceed 30% of the premium of the base policy
- Riders have no maturity benefit. The rider benefit is payable only if the contingency covered by the rider occurs
Riders offered by LIC
LIC offers five types of riders which are as follows –
- LIC’s Linked Accidental Death Benefit RiderThis rider covers accidental death which occurs during the term of the plan. In case of accidental death, the rider sum assured is paid along with the base plan’s death benefit. Other benefits of the rider include the following –
- The rider can opt either when buying the policy or at any policy, anniversary provided you are below 65 years of age
- The premium is low. It is INR 0.40 per INR 1000 rider sum assured
- LIC’s Accidental Death and Disability Benefit RiderThis rider is a step above the earlier rider. Besides covering accidental death, the rider also covers disabilities suffered due to an accident during the term of the plan. Here are the features and benefits of the rider –
- The lump sum rider sum assured is paid in case of accidental death
- In case of permanent and total accidental disability, the rider sum assured is paid in monthly instalments for ten years post the disability
- The premium of the rider is very low and affordable
- LIC’s Accident Benefit RiderThis is also an accidental benefit rider which pays an additional sum assured in case of accidental death during the term of the plan. The features of the rider include the following –
- Coverage up to the base plan’s sum assured can be taken subject to a maximum limit
- The rider can be chosen when buying the policy or at any policy anniversary
- LIC’s New Critical Illness Benefit RiderThis rider covers specified critical illnesses. If the insured suffers from any of the covered illnesses, a lump sum benefit is paid on such diagnosis. The features and benefits of the rider are as follows –
- 15 critical illnesses are covered by the rider. Common illnesses which are covered include cancer, open chest CABG, first heart attack, kidney failure, stroke, etc.
- Coverage up to 75 years of age is allowed
- Maximum sum assured which can be taken under the rider is INR 25 lakhs
- The rider also has a paid-up value if the base plan is made paid-up
- LIC’s New Term Assurance RiderThis rider pays a benefit if the insured dies during the term of the policy irrespective of the nature of death being accidental or natural. The features of the rider are as follows –
- The maximum sum assured available under the rider is INR 25 lakhs
- The rider can be taken for a maximum term of 35 years
- You get premium rebates on the rider premium too if a high level of sum assured is chosen
You can take as many riders as you want. The combined premium of the riders, however, should not exceed 30% of the premium of the base policy.
Yes, the premiums you pay for the riders are allowed as a deduction. Premiums paid for all riders, except critical illness rider, are allowed as a deduction under Section 80C up to INR 1.5 lakhs. The premium for critical illness rider is allowed as a deduction under Section 80D.
Section 80D allows a deduction for up to INR 25,000. This limit increases to INR 50,000 if you are a senior citizen.
If the illness is not covered under the 15 listed illnesses of the critical illness rider, no rider benefit would be paid.
No, the disability benefit rider covers only permanent and total disablement.