What is a Critical Illness Rider in ULIP?
A ULIP can be customised to provide additional financial security for various life situations. A critical illness rider is an optional add-on benefit which can be added to your ULIP and pays a lump-sum payout to the policyholder if they are diagnosed with a specific life-threatening disease. Adding a critical illness rider to your plan can help you further enhance it by coupling wealth building with health protection.
How Does a Critical Illness Rider Work in ULIP?
A critical illness rider uses a simple step-by-step process to provide you with the financial support needed for your treatment.
- Adding the rider to your ULIP: You can opt to add the critical illness rider when buying your ULIP or during policy renewal. A fixed premium will have to be paid for the rider throughout the term of the policy.
- Diagnosis of an illness covered under the rider: If you are diagnosed with a life-threatening disease which is covered under the rider, you can apply for a claim.
- Applying for the claim: You can simply claim the rider based on your diagnosis report. You can receive your payout after submitting your medical documents or a doctor’s certificate which can corroborate your diagnosis.
- Receive your lump sum amount: A one-time fixed lump sum will be paid to you once the claim is verified by the insurer. You can use the money for hospitalisation, specialised treatments or medications. There is no restriction on the usage of the lump sum amount.
- Continuation of your base policy and investments: Your base policy continues even if you claim your critical illness rider benefit.
What Critical Illnesses Are Covered Under a ULIP Rider?
A wide range of illnesses is covered under the critical illness rider. While coverage for specific diseases can vary as per your insurer, the following illnesses are generally covered by most insurers.
- Cancer
- Heart condition
- Neurological disorder
- Kidney disease
- Organ failure
- Other conditions like burns, sclerosis and coma
Critical Illness Rider Vs Health Insurance
The following table lists the key differences between a critical illness rider and health insurance.
| Parameter |
Health Insurance |
Critical illness rider |
| Payout mechanism |
Covers the treatment expenses and all hospitalisation bills |
Pays a lump sum amount upon the diagnosis of the illness. |
| Documentation required |
Requires the submission of hospital bills and invoices to claim the insurance |
Needs the submission of the medical documentation confirming the medical diagnosis |
| Restriction on usage |
The policy is restricted and only pays the treatment fee and the hospitalisation bills |
No restriction on usage. The payout once made can be used for anything |
| Policy type |
An individual policy which is not linked to life insurance |
An add-on cover attached on top of your base policy |
Conclusion
A critical illness rider can be an essential add-on to your ULIP as health is not guaranteed in today’s day and age. A critical illness rider can help you get an immediate lump sum payout which can cover the cost of your treatment without any delay. Ensure you read the terms and conditions of the ULIP and its rider before choosing a plan to best optimise your investments.
