What is an insurance rider?
An insurance rider is a type of policy that provides additional coverage to the main policy. Most insurance companies in Canada allow adding riders to their insurance policies; however, the caveat is you will need to pay additional premiums. That being said, adding additional premiums in the form of a rider may result in long term savings for those that are covered under the insurance. If this is the type of coverage you are in the market for, why buy multiple policies and pay separate premiums when you can simply add a rider to your existing policy?
How does an insurance rider save you money?
So, how is it that you save more by adding a rider? Good question. Well, insurance policies have a built-in policy fee that covers the administration of the policy, every business has their operational and administration costs and insurance companies are no different. Many consumers are unaware of what this fee is, and that it is typically built into the cost of their premiums. This may be a surprising revelation for some who were not aware of that they were paying these fees, but the fee is added to each and every policy in Canada. Generally, the fees range from $60.00 a year to $120.00 a year per policy, which can certainly add up. However, when you add a rider to your existing policy, you only pay this fee once, helping you to save a substantial amount over the duration of the policy.
How does an insurance rider work?
A good example of an insurance rider and how it works would be the child life insurance rider. According to, Canada Insurance Plan the child’s term benefit rider may be added to any life policy and will provide life insurance coverage for the child, stepchild or legally adopted children of the insured. The rider available for those aged 0 through 16 with the coverage running to age 21 for each insured, and expires when the premium-paying period ends prior to the child reaching age 21. The minimum coverage amount is $10,000 and the maximum is $20,000 per child.
Almost all insurance companies allow the applicant to add a child life insurance rider, however, only a handful of companies allow the primary insurer to add a children’s critical illness insurance rider. It is important speak with your insurance broker, and find a company which allows a child critical illness rider as it pays out a lump sum if one of the insured’s children is diagnosed with a covered critical illness. In addition to the child’s term benefit rider, it is also possible to add a disability rider for your spouse or loved one, that protects one’s ability to earn income. If something unthinkable happens, you will at least have the peace of mind knowing that you added a disability rider for your spouse or loved ones.
The fine print
While the purpose of purchasing an insurance rider is to provide additional coverage, it is important to know that there may be some fine print that could affect the coverage. The best way to know you are properly covered is to always go over your policies with your broker, and ensure that you are not missing anything that pertains to your coverage.