Critical Illness Rider With A Base Term Or Health Insurance
Critical Illness Riders are available with many insurers as add-ons to health insurance and term insurance. Add-ons are optional covers that can be added to your base policy at a certain extra cost with no additional paperwork.
Health Insurance
In health insurance the critical illness cover is listed as a separate sum assured when you purchase this add-on.
Term Insurance
In term insurance, a critical illness rider can be of two types based on the policy.
Comprehensive Critical Illness Rider
Accelerated Critical Illness Rider
Having a clear understanding of the differences between the two types of riders will help you avoid being caught off guard when it comes to claims.
Let's understand these two types in detail.
Comprehensive Critical Illness Rider
The Comprehensive Critical Illness Rider provides additional coverage. If you make a claim, the cover amount from this rider will be paid to you, while your base term insurance cover will remain untouched.
For example: Latha buys a term insurance with a cover amount of Rs 1 crore and a comprehensive critical illness rider worth Rs 20 lakhs. She gets diagnosed with 3rd stage ovarian cancer and requires immediate treatment. When she files a critical illness claim, she receives Rs 20 lakhs from the rider with which she can manage her medical expenses and other financial needs. In case she passes away during the policy period, her nominee shall get death benefit of 1 crore from her term insurance.
Accelerated Critical Illness Rider
The rider is a part of the base coverage you purchase and is credited to you as an advance from the base policy cover. A claim would result in this amount being paid to you and an equivalent reduction in your term insurance cover.
For example, Megna buys a term insurance with a cover amount of Rs 1 crore and an accelerated critical illness rider worth Rs 20 lakhs. She gets diagnosed with advanced heart failure and needs immediate surgery. When she files a critical illness claim, she receives Rs 20 lakhs from the rider with which she can manage her surgery costs, medical expenses and other financial needs.
In case she passes away, her nominee shall receive the death benefit.
Death benefit = Rs 1 crore - Rs 20 lakh
= Rs 80 lakhs
In this case, her nominee shall receive Rs 80 lakhs as death benefit.
Drawbacks Of Critical Illness Rider
There Is A Limit On The Cover Amount
Each of these riders has a limit on the cover amount. Rider premiums cannot be higher than the base premiums of the term insurance plan, as per IRDAI regulations. This constraint restricts the amount of coverage you can get.
Early Stage May Not Be Covered -
In many of the illnesses listed, only advanced stages of the disease are covered. For instance, first-stage cancer is not covered by all the rider options we checked.
Standalone Critical Illness Cover
Standalone Critical Illness cover is an insurance policy that you can purchase separately. With this policy, you can get better coverage for a long term covering early stages of critical illness as well.
It is also important to note that standalone critical illness policies have their own drawbacks. Over time, these policies can become expensive, and you may need to take a medical exam to qualify for coverage.
Hence, evaluate your options carefully before settling on one.
Now that we know what both of these options offer, let’s discuss how they differ in terms of their features.