When exploring health insurance, you may have come across riders and add-ons. While these sound similar, they are quite different in terms of the benefits that they offer. Add-ons are separate benefits purchased with base health insurance, and riders refer to the extra coverage. Understanding the differences between these two is essential when you are building a safety net for yourself and your loved ones. Read on as we explain how add-ons and riders can make a difference in your health insurance benefits.
What are Riders in Health Insurance?
Riders in health insurance are the extra coverage added to the base health insurance policy. The purpose is to enhance the existing coverage. To purchase riders, policyholders have to pay an additional premium.
Some of the common types of health insurance riders are a hospital cash rider, a critical illness rider, an accidental death rider, etc. You may purchase these at the time of purchasing the policy or during renewal.
What are Add-On Covers in Health Insurance?
Add-ons are the separate benefits linked to the base health insurance policy. Unlike riders that enhance the existing coverages, add-ons add a whole new benefit to the policy. Even for purchasing add-ons, you need to first purchase a base health insurance policy. Typically, add-ons can be slightly more expensive than riders.
Common add-on covers in health insurance are consumables cover, maternity cover, room rent waiver, OPD cover, etc. Add-ons can also be purchased during policy renewal or at the time of purchasing a health insurance plan. Add-ons let you customise your health insurance policy as per your specific needs.
Key Differences Between Riders and Add-On Covers
Both riders and add-ons are purchased to enhance the policy coverage in health insurance. However, there are several differences between the two.
Riders | Add-ons |
Riders enhance the existing coverage in the health insurance base policy | Add-ons add additional benefits to the base policy of the health insurance |
Riders are usually limited in nature, as they can only enhance the coverage of the base policy | Add-ons are more extensive as they add new benefits to the base policy |
The premiums charged for riders are usually lower than the add-ons | Since add-ons are additional benefits, the premium charges are usually higher than those of riders |
Riders let you enhance the coverage of the policy. So, customisation is also limited compared to add-ons | With additional benefits, add-ons give a comprehensive scope of customising your health insurance policy |
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Riders vs Add-ons: Quick Example
For a detailed understanding, here are quick examples that explain how riders and add-ons work:
1. Rider Example
Ramita Shetty, a 35-year-old engineer, purchased a critical illness rider with her base health insurance policy. She purchased it at the time of renewing the policy. So, if Ramita is diagnosed with any of the listed critical illnesses, she is eligible to receive a lump-sum payout over and above the base policy. This is the benefit of a rider in health insurance.
2. Add-ons Example
Susheela Raman, a 31-year-old bank employee, recently purchased a health insurance policy. She purchased maternity add-on cover along with the base plan. In this case, if Susheela plans maternity during the policy tenure, the maternity expenses will be covered under the health plan. This cover, otherwise, was not in her base plan.
Note: Maternity health plan usually comes with a waiting period that may range from 9 months to 24 months, depending on the insurer.
When Should You Choose Riders and Add-ons?
Understanding add-ons and riders leaves you with a critical question: “What should you choose?” Well, choosing between riders and add-ons is a big deal. You may also purchase both, according to your needs.
1. When to Buy Riders?
Riders offer enhanced coverage at a low premium. So, if you are looking for a more affordable choice, a rider can be the right option. However, it depends on the choices available and whether you really need them.
Since riders only enhance the base coverages, it is suitable for individual policies.
2. When to Buy Add-ons?
Add-ons can be a little more expensive than riders. However, they allow you to create a more comprehensive health plan. Add-ons give you the customisation option, and you no longer have to look for a separate policy.
Add-ons are usually more suitable for family floater plans, young couples planning parenthood, etc.
Things to Keep in Mind Before Choosing
Some of the points that you must keep in mind before purchasing either riders or add-on covers in health insurance are given below:
1. Cost Vs Benefits
Both riders and add-ons charge an additional premium. So, the coverage offered against the additional premium is important to assess. Generali Central offers some of the most reasonable add-on covers to enhance the coverage of your health insurance policy.
2. Type of Benefits: Lump Sum or Expense-based
It is important to understand the type of benefit that will be offered under the add-ons or riders. For instance, critical illness riders and accidental death benefits offer a lump-sum payout, while maternity add-ons are usually expense-based coverage.
3. Waiting Periods
Some of the additional coverages may have a waiting period. So, make sure to be clear regarding the waiting period. For instance, maternity benefits come with a waiting period of 9-24 months. During the waiting period, you cannot raise a claim.
4. Exclusions and Sub-limits
Apart from the coverages, you must also understand the exclusions and sub-limits of the additional coverages. Sub-limits refer to the maximum benefit you can claim for certain coverages. Certain conditions may be excluded from the policy scope. For instance, the consumables add-on cover may have sub-limits.
Before shortlisting the options, consider whether you truly need these additional coverages. Some of the add-ons and riders may seem quite attractive. However, if you don't need it, it will be a waste of the premium paid.
For instance, a senior citizen who is bedridden may not really need an accidental death benefit rider, or old parents may not require maternity add-on cover. So, smart planning is the key to affordable planning overall.
Tip: Get your entire family insured under a family health insurance policy!
Conclusion
The purpose of introducing riders and add-ons is to let policyholders customise their policy. If the base policy is loaded with all the coverages, the premium will increase, and not everyone may need all the coverages. So, a base policy only includes basic coverages to keep the premium as affordable as possible.
Depending on the coverage you need, you may choose either or both. Make sure to calculate their effect on the premium, and make an informed choice. During renewal or purchasing the policy, your insurer will present you with the option of add-ons and types of health insurance riders.
