A rider is an optional benefit bolted onto a base policy for an additional premium. Some are among the best value in the whole industry. Others are cheap because the event they cover is rare and narrowly defined, and they are sold precisely because "it's only a few dollars more" is a difficult sentence to argue with.
There is a single test that sorts them, and it appears at the end of this article. First, the main ones.
Riders that usually earn their premium
Waiver of premium
If you become totally disabled and unable to work, the insurer pays your premiums for you and the policy stays in force.
This is the rider I would argue for most strongly, because it protects against the exact circumstance in which cover is most likely to lapse. The event that makes you unable to earn is the event that makes the premium unaffordable — and it is also the event after which you will not be able to buy replacement cover. Check the definition of disability, the waiting period before it starts, and how long it continues.
Critical illness
Sometimes sold as a rider on a life policy rather than as a standalone contract. It pays a lump sum on diagnosis of a defined condition.
Worth having, with one important structural question: is it accelerated or additional? An accelerated benefit pays out of the life sum assured, so a critical illness claim reduces what your family receives on death. An additional benefit sits on top. Accelerated is cheaper and can be entirely appropriate — but you must know which you are buying, because people are frequently surprised at the worst moment.
Guaranteed insurability
The right to increase your cover at defined future points — marriage, a birth, a new mortgage — without further medical evidence.
Underrated, and valuable in direct proportion to how young you are and how likely your health is to change. If you develop a condition at 40, this rider is the difference between being able to increase your cover and being unable to buy any more at all.
Children's cover
Usually a modest benefit covering your children for death or specified critical illnesses, often at very low cost.
Nobody insures a child's life for income replacement. What this actually buys is the ability to stop working for a period without financial catastrophe if a child becomes seriously ill — and on that basis it is often good value.
Have a quotation, illustration or policy in front of you? Send it over and I will read it with you line by line before you commit — no charge, and no obligation to buy anything.
Get it reviewedRiders to consider more carefully
Accidental death benefit
Pays an additional amount — commonly double the sum assured — if death results from an accident, usually within a defined period after the injury.
It is genuinely inexpensive, because accidental death is a small proportion of all deaths. That is exactly the reason to be careful with it: your dependants' need is identical whether you die of an accident or an illness, so cover that only responds to one cause is not really solving the problem. Ask yourself whether the same money added to the base sum assured would protect your family better. Usually it would. Buy it as a small enhancement if you like it; never let it substitute for adequate base cover.
Return of premium
Returns your premiums if you survive the term. Attractive-sounding and expensive — you are pre-funding the refund, and giving up the use of that money in the meantime. Compare the additional premium against buying plain term and investing the difference.
Hospital cash benefits
A fixed daily amount for each night in hospital. Simple and pays reliably, but the amounts are typically modest against the real cost of a serious event. Useful as a small supplement, not as medical cover.
Terminal illness benefit
Often included as standard rather than sold separately — check whether you are being charged for something already in the base policy. It accelerates payment of the life sum assured on a terminal diagnosis with a defined life expectancy.
The test
For every rider, ask one question:
"If I spent this same additional premium on increasing the base sum assured instead, would my family be better protected?"
For waiver of premium and guaranteed insurability the answer is usually no — those riders do something extra cover cannot do. For accidental death and return of premium the answer is frequently yes.
Four things to check on any rider
- Does it expire before the base policy? Many riders end at 60 or 65 while the policy continues.
- Is the benefit accelerated or additional? Decisive for critical illness riders.
- What is the definition and the waiting period? Particularly for disability-linked benefits.
- What does it cost, separately stated? Ask for the premium broken down by rider, not as one bundled figure. If the breakdown is not readily given, that is worth noticing.
The order that works
- Get the base sum assured right first. An under-insured policy with five riders is worse than an adequately sized policy with none.
- Add waiver of premium. It protects everything else.
- Add guaranteed insurability if you are young, because its value declines with age.
- Add critical illness, understanding whether it is accelerated or additional.
- Consider children's cover if you have young children.
- Everything else, only after the above are in place and affordable.
Riders should be chosen, not accumulated. A policy with three well-selected riders usually protects a family better than one with eight added because each seemed inexpensive on its own.
The Guardian options worth asking about
- Accidental Death benefit on Xpress Life — where death occurs within 90 days of sustaining an accidental bodily injury, the amount paid to your beneficiary is doubled. An inexpensive way to increase the sum payable, though remember that accidental death is a narrow cause and this should never be the foundation of your cover.
- The Phoenix Plan's multiple claims benefit — effectively a built-in answer to the "pays once and terminates" problem that limits many critical illness policies. Ask how the multiple-claim structure works and what resets between claims.
- The Extended Cover Option on the Life Evolution Series, and its two premium payment options — the flexibility to adjust the policy as circumstances change is the point of that product.
- Guardian LifeCare and Global Care alongside a life policy, so that the medical and the income halves of an illness are both covered.
The rule from this article still applies: every rider has a price, and the test is whether it buys more protection per dollar than simply increasing the base sum assured. I will run that comparison for you rather than adding options by default.
Noble Accounting & Insurance is an appointed adviser for Guardian Group (Guardian Life of The Caribbean Limited and Guardian General Insurance Limited). Where an article recommends an insurance or annuity solution, that recommendation will be a Guardian Group product, and we are remunerated by Guardian Group when business is placed. Product features described here are drawn from Guardian Group's published material; full terms, benefits, exclusions and premiums are set out in the policy documents and your personal illustration.
General information only. This article sets out general information about accounting, taxation and insurance matters in Trinidad and Tobago as understood at the date of publication. Rates, thresholds, product features, forms and filing procedures change, and the right course depends on your particular circumstances. It is not accounting, tax, legal or financial advice and should not be relied on as a substitute for professional consultation. Please confirm current requirements with the Inland Revenue Division, the National Insurance Board, the Central Bank of Trinidad and Tobago or your insurer as applicable — or speak with us before acting.