What Is Family Income Benefit Rider in Term Insurance?

By Tori 4 years ago

With changing times, there is uncertainty all over. Today, it has become quite important to have the right insurance plan to protect yourself and your loved ones. 

A life insurance policy offers financial security to your family in case of an untoward incident. It covers you against the risk of an unfortunate event and provides a monetary benefit (sum assured) to your family in your absence.

If you are unsure about which type of life insurance policy to invest in, opting for an online term plan will prove to be a wise decision. 

What is term insurance?

You need to understand the term insurance meaning before investing in the policy. It is a simple and affordable life insurance product. It offers adequate coverage and helps to secure the future of your dear ones when you are not around. 

You can customize the policy as per your needs. Moreover, you can select the sum assured, tenure, and other riders. The policy will provide the sum assured to your beneficiaries in case of an unfavorable situation. A term insurance plan is an ideal way to ensure the financial stability of your loved ones.

What are term insurance riders?

Now that you are aware of term insurance,it is time to understand the concept of term insurance riders.

Riders offer additional benefits that enhance the coverage of your policy at a nominal cost. You can easily add riders to your policy; however, their terms and conditions vary among insurers. The rider is over and above the term insurance benefits offered in your plan. 

Many policyholders are concerned whether their family members will be able to handle a significant lump sum in the future or not. If you are facing the same dilemma, you can opt for a family income benefit rider that provides a monetary benefit each month. 

What is a family income benefit rider?

A family income benefit rider allows the nominees to receive income on a month-on-month basis, which is equal to the policyholder’s monthly payout, in case of an unfortunate demise. The purpose of the rider is to fill the gap of monthly income. Apart from the death benefit, the beneficiaries receive an additional amount after the death of the policyholder.

It is possible to create a distribution plan of the rider’s benefit amount. The plan should include the number of months that the insured would want his family to receive the income. As the policyholder’s age increases, the number of years, wherein the dependents can receive the rider’s benefit will reduce and ultimately diminish. This rider does not have a maturity benefit.

Advantages of a family income benefit rider

  • Offers a steady income to the family members of the policyholder, making it a perfect option if the insured was the sole breadwinner  
  • Helps family members to manage their daily expenses without facing any financial stress
  • Solves the problem of those policyholders who think that the family may not be able to handle the lump sum properly

The rider will take care of the short-term and long-term financial goals. Moreover, it will help to manage themonthly expenses of the policyholder’s dependents. It is a good alternative for consistent monthly income for about five to ten years when the regular earnings stop due to the untimely demise of the policyholder. 

Consider your requirements before opting for this rider.Go through the terms and conditions to avoid any troubles at a later stage. The rider will come at an extra premium in addition to the base policy premium. This cost will depend on the age of the policyholder, the sum assured, and the premium payment term, among other aspects.