Rider

A rider is an add-on to an insurance policy. You pay a little more premium, and the policy pays an extra benefit when a listed event happens, such as an accident or a serious illness. It sits on top of a base policy, usually a term insurance plan, and ends when that policy ends.

Common riders

A few riders come up again and again. An accidental death benefit adds an extra payout if death is caused by an accident. A critical illness rider pays a lump sum on diagnosis of a listed serious illness. A waiver of premium rider keeps the policy going without further premiums if you are disabled or critically ill. Each addresses a specific gap the base cover does not.

The cost limits

IRDAI’s 2024 master circular caps how much riders can cost relative to the base policy: health and critical-illness riders together cannot exceed 100% of the base premium, and all other riders together cannot exceed 30% of it. These limits stop a policy from being loaded with pricey add-ons that dwarf the cover you actually came for.

Rider or separate policy

A rider is convenient and usually cheaper than a standalone policy, but it is also tied to the base policy, so it stops if that lapses, and its cover can be smaller. For a big need like critical illness, a separate policy may give more. Weigh it up in term insurance riders explained.