Term Insurance Riders and Their Impact on Premium Calculation

Buying a term insurance plan is an important financial decision that can have a long-term effect on your life. Essentially, it can have a larger impact on the lives of your family members. That is why it is important to take many things into account before purchasing a term insurance plan.

One, for example, is life insurance riders. These are additional packages added on top of your base insurance plan. The riders are designed to help you fulfil your specific needs and make a standard policy as the best term insurance.

But remember, it significantly affects the premium for term insurance. With each life insurance rider, you have to pay a bit more premium than with the basic plan.

Types of Term Insurance Riders And Their Impact On Premium

1. Critical Illness Rider

Critical illness coverage provides add-on benefits to people suffering from any critical illness, such as cancer, a heart attack, or more. In this case, the policyholder receives a lump sum benefit in case they are diagnosed with any of the listed critical illnesses. This lump sum amount is paid right after diagnosis and helps to cover medical expenses and other costs related to the illness they suffered from.

The calculation of premium for term insurance with critical illness is based on the policyholder’s age, gender, and severity of their illness. If the individual is in a high-risk group as well as being old, then the risk of mortality increases, which leads to paying a higher premium for a term insurance policy.

2. Accidental Death Benefit Rider (ADB)

This rider provides additional coverage if the policyholder dies in an accident during the policy term. In this case, the beneficiary will get more coverage than the base amount assured in the event of death due to an accident. The amount should be payable to the mentioned nominee on the policy document.

In case you add the accidental death benefit rider, the premium will be higher than the base term insurance premium. But if you are involved in risky jobs or hobbies, the premium for this rider can be significantly high.

3. Waiver of Premium Rider

Waiver of premium Rider is another available rider in a term insurance plan. Suppose the policyholder has lost his income or is unable to pay the premium. This rider will ensure that the policy continues without termination.

Often, people choose a very long insurance tenure that transcends beyond their retirement age. As they reach their retirement age and stop earning, paying premiums can become very challenging. Having the waiver of premium rider can be of immense help in such a scenario.

4. Partial or Permanent Disability Rider

In this rider, if the policyholder has some partial or permanent disability, the insurance company will provide a steady monthly income to the policyholder’s family. Most of the policy providers give 10 per cent or more of the sum assured of the policy to the policyholder’s family to ensure they have a regular income.

The premium for disability riders is also calculated based on the age, gender, and health status of the policyholder. Again, if there is a higher risk, the insurance company bears a high risk of settling a higher coverage amount, leading to a high premium for the policyholder.

5. Income Benefit Rider

In this rider, in the event of the policyholder’s death, the insurance company provides the monthly income to the beneficiary of that policy. So the sudden loss of the bread-earner family would still be under the financial umbrella’s protection.

In this case, the premium will be affected by the regular monthly income size of the policyholder and the payment duration he chooses. The payment duration is the time period for which the company pays the family of the beneficiary.


Terms life insurance riders are additional packages that provide policy customisation based on the individual’s needs and requirements. However, it is important to understand that choosing multiple life insurance riders can significantly increase your term insurance premium. So, it is better to choose reputed plans like the Tata AIA term plan and consult their team of experts for free guidance.

News Reporter