Accident and hospital benefit riders

Have you taken an accident or hospital benefit rider with your life insurance policy? They are sold to provide enhanced protection under your policy.

They look attractive, but has a big drawback. The premium rates are quite expensive, compared to standalone policies.

If you buy a standalone personal accident policy to cover $100,000, you need to pay about $80 a year. To buy the same cover as a rider, you will have to pay two times the premium. The hospital benefit rider also charges much higher than a standalone policy.

The standalone policy has to offer more competitive rates, as you are able to shop around and get the best deal from the insurance companies, including the general insurance companies.

If you buy a rider with a life policy, you are a captive customer and has to pay the premium rates that is being sold to you by the agent.

What can you do now?

Look at the premium and the coverage on your riders. Get a quote for a standalone policy that provides similar coverage. If the saving is significant, you can cancel your riders and buy the standalone policy. As the rider does not have any saving component, you do not lose out by cancelling the rider.
You can invest the savings in your premium to accumulate more funds for your retirement.