What are insurance riders and how do they work?
“Riders are optional policies that provide additional protection that is not covered by your main plan,” explains Jenny Teo, head of business centre at NTUC Income.
Sik Swee Yong, manager executive at Advisors Alliance, adds that riders cost less than full-sized plans, so they give policyholders more comprehensive coverage at more affordable premiums.
However, they can only be bought with a main policy, not on their own, says Jenny.
“And while certain insurance premiums can be paid for using Medisave, riders need to be settled in cash,” she adds.
How to you choose the correct one for your needs?
1. Cost Ensure the premium is within your budget, and ask about copayment schemes, which are the percentage of fees you have to fork out for doctor’s visits or prescription drugs.
“There are also deductibles, or the initial out-of-pocket amount you have to pay before your insurer covers the remaining costs,” says Tan Hoon Lay, a senior financial consultant at AXA Life Insurance Singapore.
“Get the best plan you can comfortably afford; you can always downgrade later. It is tougher to upgrade than to downgrade, as you are likely to develop medical conditions as you get older, and insurers may sometimes impose exclusions on these ailments,” notes Jenny.
“But you should not be spending more than five to 10 per cent of your monthly income on insurance,” adds Hoon Lay.
Also, weigh your out-of-pocket costs against the premiums. “If you are trying to cut your out-of-pocket medical expenses, consider riders that cover the co-insurance and deductible portions of your policy,” advises Daniel Lum, director of product and marketing at Aviva Singapore.
2. Coverage Get a plan that meets your needs in terms of the health conditions, treatments and expenses it covers, and familiarise yourself with its exclusions and limitations.
To keep costs low, pick one that covers only what you need.
Also, check that your doctors are included in the plan’s panel of doctors – private insurers often require you to consult the physicians in their panel.
3. Risk levels “If you work in a high-risk job or have a family history of illness, it makes sense to get a more comprehensive insurance coverage,” says Swee Yong.
4. Expectations “If you prefer being treated at a private hospital, pick a plan that provides that coverage. Naturally, it will cost more than if you were treated at a restructured hospital,” says Jenny.
A version of this article first appeared in Simply Her.
(Photo: Andrei Shumskiy/123RF.com)