Term Insurance with Critical Illness Rider: Let’s Know the Conditions!


Critical illness rider policy comes in handy in covering critical
illnesses. This can be availed along with your term insurance plan.

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But what happens in case of a claim? Will the basic policy continue to cover you? Let’s check!

Term Insurance with Critical Illness Rider: An Overview

A term insurance policy can be further boosted with various riders. A critical illnesses rider is one of the most sought after products when it comes to buying term insurance riders. This policy provides financial security to a policyholder whenever diagnosed with any form of major illness. The different policies usually list the illnesses for which the benefits are provided basis on the company norms.

How Important it is to Buy Critical Illness Rider?

The World Health Organization has reported the importance of having critical illnesses cover. Due to the rising cases of critical illnesses and their exorbitant treatment expenses, having a policy that covers these illness is necessary. Further, India has seen an increase of 15.7 per cent in cancer cases since 2012. Also, cardiovascular diseases are a leading cause of death in India, with around 49.8 per cent rate of mortality within the period of 2007-2017.

Considering the ever-rising treatment expenses, providing the individual with financial support is what a critical illness rider primarily aims for.

How to Claim Critical Illness Rider?

A lump sum amount is provided to the policyholder whenever he/she gets diagnosed with an illness. The policy mentions a specific waiting period after getting diagnosed with a critical illness. Only after the specific waiting period is over, the insured can be benefited from the claim coverage. Claims for critical illness riders are made on the availability of the medical diagnosis reports.

The insurance company is to be contacted, and the claim is to be registered. However, a list of documents is needed for the same:

  • The duly filled in claim form
  • Identity proof 
  • Medical reports stating the illness
  • Summary of discharge

The claim section of the insurer will then verify the submitted documents. As per the verification, the claims made will be approved or sometimes might get disapproved.

Benefits of Critical Illness Rider

The riders provided by an insurance company are certain additional benefits offered to the life insured along with the base policy. It is not possible to purchase a rider individually. Some of the benefits of having a critical illness rider with term insurance policy are:

  • Same Premium Amount: Whenever a policyholder applies for a rider along with a term insurance policy, the premium to be paid for the rider remains the same throughout the term. There is no increase in the premium even if the policyholder is diagnosed with a critical illness. Also, the future premiums are waived off for the rider once the insured is diagnosed with the disease.
  • Tax Benefits: A policyholder is eligible for tax benefits for all the premiums paid.
  • Medical Expense Cover: With the increasing cost of the healthcare system in India, availing of medical treatments has become a costly affair. But the additional rider of a critical illness purchased along with a term insurance policy covers an individual's medical expenses when he/she is diagnosed with a critical illness.
  • Increased Chances of Survival: Due to the expensive medical cost, most of the people remain refrain from getting quality healthcare. With a critical illness cover, one can get the best possible treatment without compromising on the quality and worrying about the cost. Thus, it increases the survival ratio as well.

Critical Illness Rider: What’re the Conditions?

There are certain conditions for a rider benefit that comes with term insurance:

  • The premium of a critical illness rider or any other rider related should not be more than 100% of the base premium.
  • The premium for all the riders should not add up to 30% of the base premium.
  • The rider benefit should not exceed the benefits from the base policy.

What Happens to the Existing Term Policy When a Claim is Made?

Even after a claim of critical illnesses is made, the base term policy remains the same and will continue as it is. Being an additional coverage, the rider provides coverage only when the policyholder meets the specific condition. However, the base policy will still continue to provide life coverage. 

Suppose a term insurance plan has a maximum tenure of 30 years. In that case, the coverage will continue till a maximum period of 30 years if the claim against the selected crucial illness is made. A rider, once added, cannot be added again to the ongoing policy of the term insurance. 

The policyholder's term policy may sometimes terminate as per the conditions listed by the time insurance plan. There is no impact of the critical illness rider claims over the assured sum in the base policy.

In the case of policies that provide a waiver of the premium option, it will help in removing all the future premiums of the life insured. 

Also, if the policyholder and the spouse take a joint policy, the future premiums will be removed for life insured diagnosed with any critical illness.

To Conclude!

Critical illness riders prove beneficial when the policyholder is diagnosed with any form of critical illness for the first time. In such cases, the riders are added over to a base policy and provide the insured with protection during times of emergency. However, once the claim is made, the rider terminates, but the base policy continues to cover the life assured.

Written By: PolicyBazaar
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