Understanding Life Insurance Riders: Customising Your Coverage for Maximum Benefits

Life insurance is a significant investment that ensures your loved ones are financially secure in the event of your untimely death. However, many do not know that life insurance policies come with a facility called an insurance rider.

In this article, we will go into greater detail about life insurance riders, the various types of riders available, and how to select the best riders for one's life insurance policy.

What is an insurance rider?

An insurance rider is essentially an amendment or policy add-on facility. It allows policyholders to make modifications and extend the coverage of their current life insurance policy to better adapt it to individual needs or circumstances.

Importance of riders in life insurance

Riders allow one to customise their life insurance plan to suit their unique needs. They extend the scope of elements not usually covered in a basic policy, such as if one wants protection in case an unforeseen health ailment emerges.

Types of riders in life insurance

Riders are available in a variety of forms in life insurance policies. Some standard life insurance riders include:

Accidental death and disablement rider

An accidental death and disablement rider provides additional benefits to one’s policy in case one dies or becomes disabled due to an accident. In practice, the rider pays a lump sum amount to their beneficiaries in case of accidental death or provides a disability benefit in case they're unable to work because of an accident.

Critical illness rider

A critical illness rider covers the policyholder in case they're diagnosed with a critical illness, such as cancer, heart attack, or stroke. This rider can help cover the costs of treatment and other expenses associated with the disease.

Spouse waiver

A spouse waiver rider allows the policyholder to waive their spouse's premium payments in case of their untimely death. This ensures the policy stays in force and the surviving spouse is not burdened with premium payments.

Medical rider

Medical riders provide coverage for medical expenses that are not typically covered in a standard life insurance policy. For example, Prudential offers medical riders, such as PRUMedic Overseas, PRUMillion Med, and PRUValue Med, to ensure you’re covered for any medical issues.

Total and permanent disability rider

A total and permanent disability rider provides additional coverage if you become permanently disabled and cannot work. The rider pays out a lump sum to the policyholder, which can help cover the cost of medical treatment and other expenses associated with the disability.

For example, with Prudential’s Payor Basic, one gets annual benefits if they can't pay their plan's premiums, become 'total and permanently disabled' (TPD), or are diagnosed with a critical illness.

Mortgage rider

A mortgage rider helps pay off one’s mortgage in case they die before it is paid off, ensuring that their family has a roof over their heads and is not burdened with mortgage payments.

How to choose suitable life insurance riders?

Daunting as it is to choose the best life insurance rider, taking advantage of these riders by selecting those that meet your unique circumstances is crucial. Consider your lifestyle, medical history, and overall financial objectives while choosing riders and review the rider choices offered by your insurance.

Here are factors to consider when selecting riders:

• Consider your needs: Think about the specific needs you want to address with a life insurance policy. For example, if you have dependents, you may want to add a critical illness or disability rider. Or, if you have a house to pay off, a mortgage rider could provide added protection.

• Evaluate your risks: Consider the risks you face daily, such as a high-risk occupation, hobbies, or travel. An accidental death rider or a term rider can offer added protection in such situations.

• Review your budget: While riders can provide additional protection, they also come at an additional cost. Review your budget to ensure you can afford the premiums associated with the riders you are considering.

• Consult with a financial advisor: It's always best to seek advice from a qualified financial advisor who can provide guidance on which riders are suitable for your specific needs.
  
  

Are life insurance riders worth it?

Insurance riders can add valuable coverage to your life insurance policy. Still, they come at an extra cost, so assessing your specific needs and weighing the cost-benefit ratio is important.

For some, the additional protection a rider provides may be worth the cost, while the extra expense may provide little benefit for others.

Life insurance riders FAQ

How much do insurance riders cost?

The cost of an insurance rider varies depending on the insurer and the specific rider. Some riders are included in the cost of the policy, while others might cost extra.

Can you add an insurance rider to an existing life insurance policy?

Yes, you can add riders to your existing life insurance policy. However, the process may vary depending on the insurer, and you may need to provide additional documentation or undergo a medical examination to add riders to your policy.

Conclusion

Life insurance riders offer added protection to your policy, but choosing the right one that fits your specific needs is essential. Consider your budget and risks, and talk to a financial advisor to figure out which riders are suitable for you.

Prudential offers a range of rider options to customise your life insurance policy to suit your unique needs.

Read ‘Life Insurance for First Time Buyers in Malaysia: Everything You Need to Know’ for more information on life insurance.