What is a Family Income Benefit rider?
With the changing times filled with growing uncertainties, it has become very important to have a suitable protection plan in the form of a life insurance policy. And the insurance policy should not mean only for you but also for your family to handle their various requirements at different stages of life in your absence.
Term Life insurance is one such life insurance product that is affordable and offers substantial insurance coverage, securing your family’s future when you are not with them. It can be customised according to your needs such as you can select the sum assured, policy tenure as well as various riders. Talking about Term life insurance riders – these are extra benefits that enhance your existing policy coverage and can be easily added to your primary policy by paying a nominal fee. However, the terms and conditions for the riders vary from one insurance provider to another. The rider might get lapse once the claim for the rider benefit being made, but the base policy will continue with the life cover.
In a general term insurance policy, the sum assured amount is paid to the beneficiaries at one go as a lump-sum payment. However, many times policyholders might have a concern about whether their family members will be able to handle such a substantial lump-sum amount or not. And thus, they might opt for a family income rider that offers additional monetary benefit every month.
A family income benefit rider is one such useful rider wherein the nominees of the policy get monthly income as equal to policyholder’s monthly income. This term life insurance rider fulfils the gap of monthly income happened due to the demise of the earning member of the family. The benefit amount is an additional amount to the death benefit that passed to the beneficiaries only after the death of the policyholder. The policyholder can make the distribution plan of the rider benefit amount, such as the number of months that the insured person would want his family to receive the monthly income. As the policyholder age, the number of years for which his or her dependents will be eligible to receive the rider payout decrease and ultimately gets diminished.
How does Family Income Benefit Rider work?
Supposedly a policyholder purchase 30-year policy worth Rs 50 lakhs along with the family income rider. After 10 years, the insured person dies. At that time, his death benefit gets activated, and the nominee of the policy will start receiving a regular monthly payment for the next 20 years. The monthly payment is generally 1 percent of the death benefit amount of the insurance policy and additionally, at the end of the 30-year term, the nominee would also receive the sum assured amount that is Rs 50 lakhs.
Now let’s understand the importance of family income benefit rider and why one should think about including it in his or her term life insurance.
Why should you opt for Family Income Benefit rider?
- If you are the sole bread earner in the family, then this term life insurance rider can offer a steady income every income to your family in your absence.
- If you want that your family should get monthly funds to manage their daily expense when you are not with them, then this rider is the ideal option.
- If you think that the selected nominee cannot handle the lump sum insurance amount, then this rider can help to achieve those objectives.
Summing up the concept of family income benefit rider, we see that this term life insurance rider takes care of both long-term financial goals as well as the regular monthly expense of the dependents of the policyholder in his or her absence. It’s a good alternate for consistent monthly income for about 5 to 10 years in case it gets stopped due to the demise of the policyholder.
However, as advised by the experts, one should always opt for term insurance riders depending on their needs and requirement. Also, while opting for a rider, it is imperative to go through its terms and conditions to avoid hassle at a later stage. If you are also planning to include any rider in your term life insurance policy, then you can visit BimaKaro.in and get all information about the same. You can even speak to our insurance experts for better understanding by requesting a call back on the website.