Critical Illness: How This Life Insurance Add-On Could Save You

With increasing healthcare costs and the prevalence of critical illnesses in the modern world, one requires a strong financial safety net to support health expenses. The safety net in this case is a critical illness rider that can provide additional support during unexpected health crises.

This addition to a Life Insurance Policy can be a financial cushion when the diagnosis of an illness disrupts one’s routine. At such a time, the demands on one’s finances can escalate quickly. The Critical Illness rider can help relieve the financial pressure during periods of health distress. Given this understanding of what a critical illness rider does and the benefits that one derives from it, a person can make smart choices about his or her Life Insurance coverage.

What is a Critical Illness Rider?

A Critical Illness Rider is an add-on rider on your Life Insurance policy which will make a one-time, lump-sum disbursement payment if you are diagnosed with a listed covered illness. Critical illness riders attach supplemental protection at reduced costs over and above the benefits of your Life Insurance Policy. This rider often covers multiple diseases like heart attack, cancer, stroke, organ transplant, and kidney failure, among others. This life insurance add-on is increasingly popular as it is multi-purpose and economical in its function. Life Insurance typically pays out when the insured dies, whereas a Critical Illness rider automatically activates on the diagnosis of a covered critical illness, thereby providing relief to meet immediate medical and personal needs.

How Does a Critical Illness Rider Work?

Normally, a Critical Illness rider can be added either at the time of purchase or during specified renewal periods. At the time of adding this to a Life Insurance policy, a health assessment may be required by the insurer to establish the health risk and/or eligibility. When this rider is added to the policy, it takes effect as per specified date. Thereafter, subject to any minimum waiting period, when a particular illness is diagnosed this add-on provides for a lump sum payment, irrespective of end-use of the funds. The benefit of this is that the payout can be used at the discretion of the insured, whether to cover medical expenses, loss of income, or other financial needs.

For example, if a person has Life Insurance with a Critical Illness rider is diagnosed with cancer, they will receive a lump sum within the amount stated in the policy. This payment can be used for medical treatments, or to cover living expenses while recovering, or even for lifestyle changes to help manage the illness, such as home care.

Benefits of Critical Illness Rider

The critical illness rider provides several vital benefits that make it an excellent complement to life insurance.

Here are some reasons you should consider it.

Financial Protection

The main benefit of the Critical Illness rider is financial security.

Whenever a covered illness is diagnosed, a one-time lump sum is paid to the policyholder. Such a payout would be critical to cover expenses such as medical bills and compensate for some loss in income or any other debt incurred by the individual when recuperating. 

The financial benefit of this immediate liquidity is significant when the illnesses require prolonged, expensive treatments, which is often the case for cancer treatment, organ transplants, or cardiovascular surgeries, for instance.

Comprehensive Coverage

Comprehensive cover is provided with Critical Illness rider when taken along with a Life Insurance Policy. This peace of mind comes with the understanding that not only loved ones but also health expenses are covered. With Life Insurance and Critical Illness coverage combined, protection for the future will be well balanced.

Affordability

Critical Illness riders on a Life Insurance Policy are usually less expensive than a standalone policy for Critical Illness. The premiums for life insurance with Critical Illness also tend to be lower as the administrative costs go down with bundled options, which is more practical for an individual seeking cost-effective maximization of coverage.

Who Should Consider a Critical Illness Rider?

A responsible person who cares about financial security would consider adding a Critical Illness rider. Here are some scenarios where adding this rider can be particularly helpful:

• Individuals with a family history of critical illnesses: People with genetic predispositions to certain illnesses will benefit from having financial protection tailored to these risks.
• Sole breadwinners: To family breadwinners, the Critical Illness Riders are the most important since they ensure a financial payout when a critical illness could disrupt the breadwinner's work and income flow.
• High health care expenses: In scenarios where there are high expenses for health care, the payout from the Critical Illness rider provides an additional financial safety net. This can help prevent a drain on one’s savings to pay for medical bills during the diagnosis and treatment of a critical illness. It could also be a support for the family to maintain their standard of living as they recover from the health crisis.

Key Factors To Consider Before Adding A Critical Illness Rider

Before adding a critical illness rider, consider the following essential aspects to ensure that it fits your coverage needs:

• Coverage Amount: Choose an amount that would be enough to cover all treatment costs and lost income. An amount that is too small may fail to provide enough support at the right moment.
• Terms and Conditions: Riders also come with specific terms and conditions. This might include a waiting period, which is the period before the rider coverage is activated, and exclusions, which refer to conditions or risks that are not covered. Make sure that you understand these aspects because they indicate the scope of protection.
• Policy Compatibility: Some Life Insurance policies may not allow riders post-purchase. It is prudent to check on these options at the time of policy initiation.

If you are looking at the option of early cash payout, you should check our Shriram Life Early Cash Plan and Shriram Life New Shri Life which also provide Critical Illness riders for additional coverage.

How to Add a Critical Illness Rider to Your Life Insurance Policy

Adding a critical illness rider to your Life Insurance Policy is a simple process. Here's what one needs to do:

1.  Review Your Existing Policy:

Check with your existing Life Insurance provider to determine if adding riders is possible. Most policies provide a grace period during renewal periods or at the time of purchase.

2. Review the Amount of Critical Illness Coverage:

According to your health background, determine how much critical illness coverage you may require because of any other debts, and then proceed.

3. Contact to Add/ Update:

Call up your insurer and ask to add on a Critical Illness rider, which might call for your application, some medical documents, or a health test in certain circumstances.

4. Revised Policy Changes:

You need to read the latest policy document carefully about all changes in the premium, terms, and conditions related to the rider for a critical illness.

5. Review Periodically:

Review your policy periodically to determine if your coverage is suitable, and then change accordingly.

Conclusion

Adding a Critical Illness rider may be very affordable and could ensure financial protection in case you are diagnosed with a critical illness. It provides a valuable financial cushion in case of an unexpected health crisis. Given the merits of affordability, comprehensive coverage, and financial protection, the Critical Illness rider is a wise decision for building a well-rounded insurance plan.

Shriram Life Insurance is committed to creating Life Insurance Plans that cater to a wide variety of needs including risk protection, long-term savings and estate planning, among others. Additionally, they understand the policyholders’ needs and provide flexibility in several schemes with add-ons that can be opted for to enhance the base plan’s benefits.