Rider Versus Stand Alone Policies- Which One is a Better Option?

Here is a question that pops up quite often when buying an insurance policy- “For the additional insurance needs would a standalone policy be advantageous or, would a rider be sufficient”? Where both the options seem to offer similar benefits, there are a few noticeable differences in their coverage and the premiums. So which one would be most suitable? Let’s get started evaluating the two.

Insurance Rider as an Add-on Benefit

An insurance rider is an add-on benefit that could be opted for, over and above the base insurance policy. For an extra premium amount, you could enhance your base cover with additional benefits to make it suit your specific needs. For example, some of the most popularly offered riders that come with life insurance policies are critical illness rider, personal accident rider or permanent disability rider. The basic purpose of a rider is to give you little more protection than what your base policy already has to offer.

Standalone Policy for a Comprehensive Cover

Insurance companies offer stand alone policies that provide a comprehensive cover as per specific insurance requirements. You would be paying premiums separately for these policies for specific covers such as critical illness or accidental disability. These stand alone policies would be independent and not linked to any other health or life insurance policy.


The Deciding Factors

Rider versus standalone policies- here are the deciding factors to be considered when making your choice.

  • The Cost Factor:

Riders work out to be a much cheaper option. For a few extra rupees over your  regular base policy premium you could get the much needed extra protection. They do not have any expense loading on their premiums as this would already have been included in the base premium. Standalone policies, offering the same specific covers are much more expensive on the pocket. The premiums are dependent only on the specific cover you have opted for. Expense loading is charged separately, thus making it expensive.

  • Insurance Coverage

The sum assured that comes with a rider is attached to the base policy, and thus may seem to be limited. On the other hand, a standalone policy being a much more comprehensive option, gives you a wider and greater flexibility to choose the desired coverage. This is one of the most important factors that would help you decide which one to opt for

  • Insurance Term

Riders remain in force only till the base policy is in force. Once the base policy lapses, surrendered, mature or cease to exist, they do not offer any protection. Stand alone policies could be opted for independently for a desired period, when protection would be required. They stay in force till the end of the policy term.

  • Insurance Claims

Riders may well prove as an inexpensive option. However here is what you have to bear in mind. If a claim arises out of a rider, most insurers reduce the cover by the same amount. Here is why. Insurance companies generally keep a ceiling on the sum assured of a rider. Thus a single claim reduces your rider sum assured.

Whether it is a life insurance policy or a health insurance policy, enhancing your protection to suit your specific requirement is quite a necessity. Where riders may prove advantageous for a shorter duration, if you seek protection for a longer term and desire a wider range of protection a standalone policy could well be your choice. Before making a choice, evaluate your insurance needs by looking into your finances, number of dependents, lifestyle and medical history. This would give you better picture of what and how much insurance you would require. Your decision must stem from your individual goals and financial needs.