What is a policy rider and how can it work for you?

Published on November 25th, 2020
  Written by 
Bill Tsouvalas
Bill Tsouvalas is the managing director and a key company spokesperson at Savvy. As a personal finance expert, he often shares his insights on a range of topics, being featured on leading news outlets including News Corp publications such as the Daily Telegraph and Herald Sun, Fairfax Media publications such as the Australian Financial Review, the Seven Network and more. Bill has over 15 years of experience working in the finance industry and founded Savvy in 2010 with a vision to provide affordable and accessible finance options to all Australians. He has built Savvy from a small asset finance brokerage into a financial comparison website which now attracts close to 2 million Aussies per year and was included in the BRW’s Fast 100 in 2015 as one of the fastest-growing companies in the country. He’s passionate about helping Australians make financially savvy decisions and reviews content across the brand to ensure its accuracy. You can follow Bill on LinkedIn.
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Policy riders is a feature that can come in handy when it comes to tailoring your life insurance to suit your needs. It is also known as an optional benefit which you can add to your policy and claim on in the future. This guide will help you know how you can use a policy rider to tailor make towards your lifestyle needs.

How can it work for you?

When you take out comprehensive life insurance your insurer or account will inform you of extras that you can add to your policy to ensure that you are adequately covered in the future. These add-ons are for people who want more than just the standard policy that could be lacking for your circumstances. But keep in mind that such add-ons will come at a cost.

What cost will a policy rider come at?

Adequate coverage that gives you peace of mind comes at a cost that you need to be mindful of. This means that if you are planning to add features to your policy it will be advisable that you speak to a financial planner or a qualified accountant who will be able to assess if these additional features are necessary. The cost of these add-ons will vary based on your current level of risk.

To make the most of these add-ons you will have to ask and compare. Ask your insurer how adding such features will cost you and then compare to see if you can get a better deal. You might want to consider assessing with the additional expense is worth the coverage you are getting.

What are policy rider limitations?

Unfortunately, not everyone will be able to add policy riders to their policy. Keep in mind that your ability to adapt your policy will be determined by the level of risk you are held by insurers. This can also be affected by your age and the type of occupation you work in. Once again insurers differ in terms of what you can add and what you cannot add. Therefore, you will have to check with your insurer to see what is applicable to your situation.

What type of policy riders can you add?

Policy riders give you the flexibility to add or waive certain features in your policy to help adapt to your circumstances accordingly. A few mentionable policy riders are:

  • Extra rehabilitation costs can help you lower the cost of any extended rehabilitation, acting as a buffer to save you from additional expenses.
  • Child cover can help you rest easy knowing that the expenses that arise of taking care of a terminally ill child or the funeral costs of a child are taken care of through a cash benefit that is paid out.
  • Accidental death cover will ensure that your beneficiaries are taken care of should you die due to an accident.
  • You can waive your premiums if you are unable to work.
  • Bypass the waiting period by adding a feature that helps you skip the waiting period to ensure that a lump sum gets paid out.

Additional policy riders that can be useful to people who work in health care can be a needle stick injury cover that healthcare workers that have been pricked by a needle and have contracted an illness. Speaking to a financial advisor or an insurer will help you find a cover that is applicable to your circumstances.

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This guide provides general information and does not consider your individual needs, finances or objectives. We do not make any recommendation or suggestion about which product is best for you based on your specific situation and we do not compare all companies in the market, or all products offered by all companies. It’s always important to consider whether professional financial, legal or taxation advice is appropriate for you before choosing or purchasing a financial product.

The content on our website is produced by experts in the field of finance and reviewed as part of our editorial guidelines. We endeavour to keep all information across our site updated with accurate information.

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