Are Critical Illness Riders better than Critical Illness Insurance Cover?

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Availing a term insurance policy with critical illness rider is recommended when there is a family history of these ailments. As a regular term insurance wouldn’t cover the insured for medical expenses incurred, availing a rider plan is a better option. 

But what if the rider is unable to meet the expenses? What if even after having a critical illness rider, the coverage is not sufficient enough? In such cases, the thought of having a standalone critical illness plan comes in.

Let’s dive into the discussion and weigh in the different factors that may tilt the balance towards Critical Illness Rider or buy Critical Illness Insurance as the better choice. 

Flexibility factor with Coverage Amount and Duration

• Critical Illness Insurance policy offers more flexibility and leverage when it comes to the sum insured and the duration of the policy. Hence, if there is a requirement to get a higher amount insured for critical illnesses, it is better to go with a standalone Critical Illness Insurance policy. 
• Critical illness insurance can pay for expenses that are not covered by a traditional insurance policy. The insured sum of money can also be used for non-medical expenses such as transportation, child education, EMIs etc.  
• On the other hand, the best term insurance plan with a critical illness rider is not as flexible as the Critical Illness Insurance policy regarding the sum insured and the duration. 
• As this is an add-on feature, the sum insured cannot exceed the basic plan. Also, once the primary policy is terminated, the rider policy ceases to exist. Moreover, After the critical illness treatment is completed and the fixed insured sum is released, the critical illness rider policy will automatically terminate. 
• CI Rider can be renewed along with the existing standard medical policy, and no separate medical test is required as this is bought along with the base plan. 

Cost to Avail Critical Illness Insurance and Critical Illness Rider

• The best term insurance plan with a critical illness rider is much more affordable than a standalone Critical Illness Insurance. It, hence, can be the best alternative with the right conditions. 
• CI Riders have a limited pay option as the premiums are only required for the short term and cannot exceed the base policy plan premium. Hence, the premium cost can be adjusted based on the plan and can be termed as cheaper when compared to CI Insurance.

• The standalone Critical Illness Insurance works on a different principle, where you can choose a higher premium compared to rider cover. Still, the premium has to be paid as long as the policy is running. 
• For the policyholders who are budget conscious, CI rider can therefore be the best low-cost option available for critical illness. However,  to get the maximum benefits out of this policy, you have to choose the right premium and coverage.

Scope of Coverage under CI Insurance and CI Rider

• In cases of critical illnesses such as cancer and stroke, the chances of getting hospitalised is high. Also, these critical illnesses carry additional risks of inducing other critical illnesses like kidney failure, lung damage, etc. Hence, multiple types of coverage are significant and can be life-saving in cases of a shortage of funds. 
• The standalone Critical Illness Insurance is equipped with multiple critical illnesses coverage. Even after the treatment is completed, the policy remains in place and will carry on until the whole medical insurance policy is terminated. 
• The best term insurance plan with a critical illness rider doesn’t have multiple coverage options. The CI rider will only provide a one-time lump sum amount for one critical illness, and then the policy will be terminated. 
• Also, the number of critical illnesses covered in CI rider is limited to about 10, whereas CI Insurance can provide coverage of up to 20 life-threatening and lifestyle-disabling critical illnesses. 
• CI insurance provides a safety blanket for policyholders when it comes to hospitalization multiple times.

ECI Coverage under CI Insurance and CI Rider

As medical technology advances, the chances of early detection of critical illnesses such as stage 1 cancer, Brain issues have become very high. This will increase the chances of full recovery for patients due to early treatment. However, it is essential to know that not all critical illnesses qualify for early-stage treatments under critical illness policies. To get the coverage benefits immediately after the diagnosis, Early Critical Illness coverage becomes mandatory.

• Standalone Critical Illness Insurance policies are equipped with ECI coverages. This means the sum assured will be released immediately for the critical illness treatment after the first diagnosis.

• The best term insurance plan with a critical illness rider will provide ECI coverage only if an ECI rider is purchased separately. Also, ECI riders are only available for whole life insurance. If the CI Rider is attached to term insurance, ECI coverage will not be provided under the best term insurance plan with a critical illness rider.

Comparison Based on Additional Benefits 

• Standalone Critical Illness Insurance policies offer additional benefits such as bigger pay-outs or lump sum for specific critical illnesses or conditions. There are also regular free check-ups and child cover included in some of these policies. 
• The best term insurance plan with a critical illness rider will have no such additional benefits but just critical illness coverage specified in the policies. 
• In the case of CI Insurance, there is generally a minimum waiting period of 30 to 90 days before the coverage begins. In contrast, CI Rider policy will commence from day 1 of the policy approval.

Critical Illness and Disability Riders: How Useful They are?

A Critical Illness Rider is a policy attached additionally to a term insurance policy. The policy ensures a specific sum insured to be paid to the policyholder when a specified critical illness is diagnosed and requires immediate treatment. It is a one-time pay-out and the policy will be terminated immediately after the sum insured is released. The CI Rider is applicable to critical illnesses such as heart attack, cancer, stroke, bypass surgery, kidney failure, and major organ transplant, etc. 

An Accidental Disability Rider is a policy added to the term insurance. It will come into effect when the policyholder meets with an accident that causes a permanent physical and mental disability. With the disability rider, the policyholder will get regular income for the next 5 to 10 years or a lump sum amount based on the type of coverage release chosen. Normally, the disability rider is also coupled with the Accidental Death Rider for better security. It is imperative to know that Disability Rider is only applicable to the policyholder who becomes disabled due to an accident during the policy period.

Reasons to Choose the Best Term Insurance Plan with a Critical Illness Rider

The main reasons to choose the best term insurance plan with a critical illness rider are,

• As critical illness treatment is expensive and usually cannot be covered entirely from the standard term policy, CI Rider will add more value and provide the policyholder with a lump sum amount that can be used to cover the treatments costs.  
• As the premium cost of CI Rider cannot exceed the base insurance policy, the premium amount will be less than that of a Standalone Critical Illness Insurance policy.
• No medical test is necessary as the CI Rider policies are add-on features to the primary term policy. 
• No separate renewal is needed as the policy can be renewed along with a standard term policy. However, if the base policy expires, the CI Rider policy also becomes invalid.
• In the case of CI Rider, the sum insured is released immediately after the critical Illness diagnosis. 
• Tax benefits are applicable under Section 80C and 80D available on the premium paid for riders.

In a Nutshell! 

Thus, opting for a Critical Illness Rider can solve the significant financial burden associated with the treatment expenses in the case of Critical Illnesses. Making a sensible choice between Critical Illness rider and Critical Illness Insurance depends on the health conditions, affordability of the premium, and many other factors. But having a CI Rider will add an extra cushion during challenging medical emergencies due to critical illnesses.