Riders with Life Insurance Vs Standalone Health Insurance Plans

Standalone health insurance plans come with higher coverage and higher premiums. Riders with life insurance are comparatively cheaper and the premiums are cheaper. Standalone health plans come with a waiting period, whereas riders don’t.

If you are looking for coverage provided for Personal Accident and Critical Illness there are two options to choose from. This includes this particular coverage as a rider on your life insurance policy or as a standalone policy from health insurance providers. But you might be facing a dilemma to be able to choose the one that suits you best. This can be easily done when it comes to these two options if you consider their advantages and disadvantages by weighing their features.

How much premium has to be paid?

Standalone policy has higher premiums when one considers that the coverage is better as against a rider for a life insurance policy. The standalone policy premiums also increase based on the policyholder's age group as against a rider, which remains constant during the whole policy term.

Standalone Health Policies vs. Rider in Life Insurance:

Here are the questions you need to ask and answer to be able to come to a conclusion:

How much does the options actually cover?

Any and lower price is always preferable. The comparison has to be made between coverage that is available in the cases of accident or a critical illness rider along with a life insurance policy against the coverage the policyholder is entitled to for a standalone policy. In general, a standalone policy provides larger coverage as against a rider. You can also keep in mind that there is a reason why riders are not that comprehensive. This is generally due to the fact that cost price of the insurer increases. The IRDA which protects the interest of the policyholder has regulations that makes the premium amount to rider for any accident and critical illness to be not more than 100 percent of the premium for the main product which in this case is the life insurance. It is essential to also remember the fact that the rider benefit on claim must not be more than the sum assured if it is under the basic product.

What are the conditions for the renewal of the policy?

Stand alone critical illness or accident policies come under IRDAI’s Health Insurance Regulations, 2013. A health insurance policy is renewable for life. Whereas riders stay active only as long as the policy term of the life insurance plan.

What are the waiting period conditions?

Accident and critical illness are generally covered from the first day when it comes to policy claim as a waiting period is absent for riders with a life insurance. In the case of standalone policies a general waiting period ranges between thirty to ninety days.

What are the benefits I am getting pertaining to tax?

A policyholder for a life insurance with a rider is eligible under Section 80C/80D of the Income Tax Act. When it comes to standalone policies, there is no benefit for personal accident policies. Therefore when one considers the insurance from the accident perspective, a rider is more advantageous.

What are the documentation and paperwork requirements?

Accident and critical insurance rider purchased along with a life insurance policy effectively makes your life insurance policy a three-in-one policy thereby helping you create a compact insurance portfolio. So, you have to maintain separate policy documents for each policy and will need to remember separate policy renewal dates etc. In case of standalone policies, it will be a bit more effort in terms of managing multiple policies.

Therefore by numbers we can see that a rider scores more in terms of numbers but if your sole concern is the extent of coverage, provided by the option, the standalone policy might be a better option for you.

GST rate of 18% applicable for all financial services effective July 1, 2017.

Disclaimer: Premiums may vary depending upon factors like age, location and prevailing taxes/GST.

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