When we are in the process of purchasing insurance policies, most of us generally require a mixture of policies in order to cover all the most basic eventualities like death, savings, beneficiaries, etc. However, before you start purchasing individual policies for each need, you should be aware of this list of products called riders, that basically extend the coverage and functionality of basic health insurance policies (generally Whole Life and Endowment), usually at a cheaper rate than if a separate policy was purchased.
1. Waiver of premium rider
This rider allows you (the insured) to stop payment on premiums in the event that you become totally and permanently disabled or suffer from a critical illness covered under the policy, depending on the type of rider you chose. This will relief you or your family from additional financial burdens of servicing the policy when you are unable to work normally.
2.Total and permanent disability (TPD) rider
The TPD rider provides payment in the event that the insured becomes totally and permanently disabled. For example, if this rider was added to a Whole Life policy, if the insured becomes disabled due to an accident but survives, the coverage under this rider will either be paid out as a lump sum or in installments. Note that the original sum covered under the Whole Life policy is untouched and will still be paid out when death occurs subsequently.
3. Critical illness rider
Similar to the TPD rider, the critical illness offers coverage in the event of contracting one of the listed critical illness in the policy. There are a few variations of this rider, some will use the original assured value under the basic policy as early payment while others will provide additional coverage independent of the basic sum assured. You should ask your agent on the options and choices available.
4. Term rider
A Term rider is basically a Term Insurance plan attached to your basic policy. This is generally used when additional coverage is required for a fixed period of time (eg. when your children are still fully dependent on you), but you do not want the significantly increased premiums for this additional coverage under the basic policy. Thus a Term rider is a good option to get that increased coverage when your kids are still young and can be terminated (basic policy is still in force) when they reach adulthood. There are several variants to this rider and you should ask about them.
5. Payor Benefit rider
This is similar to the waiver of premium rider except when the basic policy covers a child. In the event that you, who is paying the premiums on this policy dies, becomes disabled or sick (depends on what you choose), the premiums of the basic policy will be waived until the child reaches a specified age (like 21 or 25 years old). After which, the child should be working and will be able to pay the premiums on their health policy.
6. Guaranteed Insurability Option rider
This rider basically gives you the right to purchase additional coverage at specific points in time without question on your health status. This is to protect against the possibility that you become sick and require more coverage. If you were to purchase a new policy after the time you are diagnosed, most insurers will not cover the illness already diagnosed. This is especially useful when purchasing a health policy for children, who have a long life span ahead. With this rider, your child can opt to increase coverage in the event of coming down with critical illness or disability.
7. Accidental Death/Disemberment Benefit rider
This rider provides additional payment in the event that death/disemberment occurs due to an accident. Thus this is for those who want an increased payout for beneciaries in the event of a sudden death/disemberment due to accident. Note that suicide or self-inflicted injuries are not covered under this rider.
8. Hospital Cash Benefit rider
This rider is very useful to cover the expenses of hospitalization especially when your basic policies do not provide such cover. If you purchased a Whole Life policy and you get seriously ill and need to spend significant amount of time in the hospital, the Whole Life policy itself will not have any payouts during that time since payout will only be made upon death. This rider will help ease some financial strain by giving a daily allowance for each day you spend in the hospital.
Riders are excellent options to supplement your basic Whole Life and Endowment policies and to plug the gaps that these basic policies cannot cover. They are usually cheaper than if a separate policy was purchased to plug those gaps and have sufficient flexibility for you to choose the right type that fits your needs. Ask about riders available when you are considering purchasing new policies.