Critical Illness Rider in Life Insurance

A critical illness rider is an important add-on that can ensure the financial stability of a family in difficult times when a family member is diagnosed with a crucial medical condition that demands huge treatment costs.

It provides financial coverage for treating specific critical illnesses and is an essential investment in today's world, where medical treatment costs are skyrocketing.

Let's explore the details of critical illness riders and how they can provide financial security to you and your family during tough times.

A critical illness rider is an add-on feature in a life insurance policy that ensures financial stability during a medical crisis. It can be added for a nominal additional charge and provides coverage against a range of critical illnesses like cancer, heart attack, stroke, kidney failure, and other such ailments.

If the insured is diagnosed with any covered illnesses, the rider provides a lump sum amount to the beneficiary. This amount can then be used to cover medical expenses or other financial needs, thus ensuring that the treatment is not compromised, or the family does not suffer due to scarcity of funds.

The critical illness rider can be especially beneficial for individuals with a history of critical illnesses in their family or those working in high-risk professions. Depending on the insurer, it can be purchased at the policy's inception or on the plan anniversary.

Is It necessary to buy a Critical Illness Rider?

Critical illness refers to severe health conditions that typically require crucial medical attention, treatment, and recovery time.

These illnesses often have a high cost of treatment and thus, become a financial burden, not just because of treatment expenses but also loss of income of the patient during treatment.

Although the specific list of critical illnesses can vary depending on the insurance provider or healthcare policy, a list of some common illnesses is discussed in the next subhead.

Critical illness rider provides coverage against a pre-defined list of critical illnesses. Though IRDAI has defined a list of 50 critical illnesses, the covered ones may vary from one insurer to another.

Some common critical illnesses covered by most insurers include:

1. Cancer of specified severity
2. Heart attack
3. Stroke
4. Kidney failure
5. End stage lung failure
6. End stage liver failure
7. Major Head Trauma
8. Loss of Speech
9. Third Degree Burns
10. Major organ transplant
11. Multiple sclerosis
12. Permanent Paralysis of Limbs
13. Aorta surgery
14. Benign brain tumour
15. Blindness
16. Deafness
17. Coma of specified severity 
18. Parkinson's disease
19. Alzheimer's disease
20. Motor neuron disease (ALS)

The exact list of illnesses covered may vary from one insurer to another, and some insurers may offer additional coverage for other critical illnesses. It is essential to carefully review the policy document to understand the list of illnesses covered and any exclusions that may apply.

1. Waiting Period

2. Diagnosis of a Covered Illness

3. Survival Period

4. Lump Sum Payment

If all prerequisites are met, the policyholder receives a lump sum payment from the insurer as per the claim and the policy specifications.

Let’s take the example of Mr. Saha.

Mr. Saha bought a term plan of 1 crore for 15 years and added a critical illness rider of 10 lac coverage, for a nominal premium.

After 3 years, Mr. Saha is diagnosed with cancer. Thankfully, the disease is covered under his critical illness rider.

However, Mr. Saha had to wait for the survival period of 30 days after which he received the coverage amount of 10 lacs. He used this amount for his chemotherapy and other best treatments possible, thus recovering completely.

Unfortunately, cancer relapsed after 8 years. This time, he could not claim the critical illness rider since it can be claimed just once. Also, he didn’t survive the required survival period of 30 days. In this case, after his demise, the beneficiary is paid the sum assured of 1 crore under his base term plan.

1. People with a Critical Illness History in the Family

2. Primary Earners

3. People with Dependents

1. Coverage

2. Illnesses Covered

3. Waiting Period

4. Survival Period

5. Claim Settlement Process

You should also consider the claim settlement process for the rider. You need to ensure that the process is simple and hassle-free, and that the insurer has a good track record of settling claims in a timely and efficient manner. You can check the claim settlement ratio of different insurers to make an informed decision.

By considering these factors, you can choose a critical illness rider that meets your needs and provides comprehensive coverage for critical illnesses.

In today’s times when lifestyle diseases are increasing every day and treatment costs are skyrocketing, a coverage extending beyond the limits of usual health insurance has become a necessity.

Thus, a critical illness rider can be a valuable addition to a life insurance policy for individuals looking to protect themselves and their families against the financial impact of a critical illness.