A Rider Can Help Expand Your Insurance Coverage

[Apollo Munich CEO]

If you want to increase the coverage of your life insurance policy so
that a higher sum insured is paid in case of eventualities like
disability or death due to an accident, then going for the disability
and accidental death rider with a term insurance policy or a personal
accident policy along with a term insurance are suitable options.

A personal accident policy, offered by general insurance companies, is
suitable for those who are adequately covered by a separate term
insurance policy to take care of natural as well as accidental death.
The disability rider is suitable for policyholders who want the
convenience of paying only one yearly premium towards life insurance
and riders. An accident policy works as a standalone policy and
provides coverage up to the sum insured for accidental death and
accidental disability.

A term insurance on the other hand, provides the sum insured in the
event of the policyholder's death, however, there is no provision for
the sum insured to be paid in the event of disability. Hence, taking a
disability rider on term insurance allows a policyholder to claim the
sum insured for physical disability due to an accident.

In addition, an accidental death rider on term insurance allows the
nominee of the policyholder to claim the total sum insured in term
insurance, along with the sum insured for the accidental death rider.

“Personal accident policies offered by general insurance companies are
more or less the same with the accidental death and disability riders.
However, some term insurance disability riders exclude temporary
disability, which is covered in a personal accident policy,“ said
Sanjay Datta, head of customer service at ICICI Lombard General
Insurance Company.

The premium for a 30year-old person choosing a 20-year term insurance
with coverage of Rs 5 lakh has to pay Rs 495 for an accidental death
benefit rider and Rs 248 for a permanent disability rider from Kotak
Mahindra Old Mutual Life Insurance. Similarly, Max New York Life
Insurance Company will charge Rs 675 for an accidental death rider and
permanent disability rider combined together. The policyholder must,
however, take a base term plan for these riders. Typically, a term
insurance policy from Kotak Mahindra for the same person will cost Rs
3,119 with coverage of Rs 15 lakh. The whole policy package with
riders will entitle the policyholder to receive Rs 15 lakh in the
event of natural death, Rs 20 lakh in case of accidental death and Rs
5 lakh in case of total physical disability.

On the other hand, a 30year-old person opting for Rs 5 lakh coverage
on a personal accident policy will have to shell out Rs 589 for Royal
Sundaram Accident Shield policy and Rs 650 for Bajaj Allianz General
Insurance Company’s Personal Guard policy. These policies will pay the
sum insured of Rs 5 lakh in case of accidental death or permanent
total disability of the policyholder. Also, a policyholder is eligible
to claim a certain fixed sum insured depending on his policy terms if
he suffers from temporary or partial disability. “The sum assured is
also payable on account of disablement coverage (permanent or
partial). However, the exact percentage payable will be determined
based on the extent of disability and that varies from insurer to
insurer. Like in our case, we pay 50 per cent of sum insured if the
person becomes incapable of speech or loses hearing capability in both
ears,“ said Arun Mehrotra, head of retail underwriting and product
development at IffcoTokio General Insurance Company.

“General insurers offer features like accidental medical expenses,
ambulance charges, and education fund, which are not available in life
insurance riders. So, depending on the policyholder's needs, he can
choose the product and insurer that best suits him,“ said Antony
Jacob, chief executive officer of Apollo Munich.