Critical Illness Rider & Waiver of Premium Rider: Why These Add-Ons Strengthen Your Life Insurance Policy

What Are Life Insurance Riders?

Life insurance riders are add on  benefits that can supplement the coverage of your base  life insurance policy at a small additional premium. Popular choices include critical illness riders, accidental death and disability riders,  waiver of premium riders, etc. You can add these riders to your policy at inception or at a policy anniversary if the same is allowed under the plan and subject to specific terms and conditions.

 

What is a Critical Illness Rider?

A critical illness is a severe medical condition that frequently necessitates long-term care and can impact your lifestyle considerably. These conditions can cause individuals to lose their jobs, deplete their savings, and experience extreme financial stress.

The Critical Illness Rider is an add-on to life insurance policies that insurers offer to provide financial protection. When the life assured  is diagnosed with a covered critical illness, this rider helps them manage daily expenses and treatment costs without using up all of their savings by paying a lump sum pay out.

The main advantages of the Critical Illness Rider include:

1. Payout in full upon diagnosis of a specified illness.
2. The pay out helps  cover  the cost of care in hospitals that provide critical care.
3. Replaces income when one is unable to work.
4. Keeps the family's way of life from being financially disrupted.
5. Even after a rider claim, the base life policy is still in effect.
6. Flexible use for household expenses, EMIs, or treatment.

 

Common illnesses covered in the Critical Illness Rider

The exact list of illnesses covered varies across riders, please refer to rider documents for further details. However, some of the common illnesses that are covered include the following¹ -

1. Cancer of specified severity
2. First heart attack (acute and major)
3. Stroke
4. Kidney failure
5. Major organ transplants
6. Paralysis of limbs
7. Multiple sclerosis with confirmed diagnosis
8. Coronary artery bypass surgery etc

 

What is a Waiver of Premium Rider?

Another useful life insurance add-on that safeguards your policy in times of financial difficulty is the Waiver of Premium Rider. Future premiums are waived if you become disabled, suffer a serious illness, or if the life assured  passes away during the policy term, which prevents premium payments. In such cases, the premiums are waived, but the policy continues, thereby providing you and your loved ones' continuous financial protection.

 

When does it apply?

The Waiver of Premium Rider applies when a policyholder experiences significant hardships, such as a permanent disability, the diagnosis of a listed critical illness, or a loss of income as a result of specific conditions. In these situations, the life insurance policy continues unaffected, and all subsequent premiums are waived.

 

Key Benefits

These are the key benefits of the waiver of premium rider:

1. Provides continuous policy coverage even if you are unable to make premium payments.
2. Safeguards your family's financial stability in the event of specified emergencies.
3. Keeps all benefits intact by preventing policy lapse.
4. An inexpensive addition that fortifies your basic life insurance policy.
5. Comfort in knowing that your coverage endures even in the event of a loss of income.
6. Lessens financial stress in unexpected circumstances.

 

Critical Illness Rider vs Waiver of Premium Rider

Riders add important extra protection to a life insurance policy. The Critical Illness Rider and the Waiver of Premium Rider are two of the most beneficial. Although they have different functions, both protect your financial future. You can select the best combination for more robust coverage by being aware of the distinction between critical illness and premium waiver.

 

Difference Between Critical Illness and Waiver of Premium Rider

 

Why is it better to add a critical illness rider to your life insurance policy?

Many policyholders only consider coverage continuity when weighing critical illness vs premium waivers. However, adding a critical illness rider to your life insurance policy can be far more advantageous.

Here’s why choosing a rider makes sense:

1. Cost-effective: Riders are pocket-friendly additions to your base policy.
2. Integrated Coverage: One policy covers both illness and life insurance.
3. Management Made Simpler: You can manage the premium payments at once so that your coverage continues unaffected

 

You can guarantee complete financial security that covers both life risks and medical emergencies without breaking the bank by combining life insurance with a critical illness rider.

 

Key Takeaways

1. Lifestyle and financial disruption can result from serious illnesses like cancer, heart attacks, and strokes.
2. Planning is crucial because of treatment expenses and lost income.
3. When a listed illness is diagnosed, a Critical Illness Rider pays out a lump sum.
4. The rider payout can be utilized towards  daily expenses, EMIs, and medical bills.
5. Even after a rider makes a claim, the base life insurance policy is still in effect.
6. An inexpensive addition that improves families' and individuals' overall financial security.

 

Conclusion

When reviewing your life insurance policy, it's critical to comprehend the distinction between critical illness and waiver of premium riders. A waiver of premium rider allows your policy to continue even if you are unable to pay premiums, whereas a critical illness rider offers a lump sum payout upon the diagnosis of a listed critical  illnesses. When combined, they improve financial security by protecting against both income loss and health risks. By including these riders, your life insurance becomes more in line with your family's long-term financial security requirements.

 

FAQs

1. What is a Waiver of Premium Rider, and how does it work?

   A life insurance rider,known as a Waiver of Premium Rider eliminates future premiums if you suffer from a contingency covered under the rider.

2. Can I add both the Critical Illness Rider and Waiver of Premium Rider to the same policy?

   Yes, you can typically increase protection against medical expenses and income loss by adding both a Waiver of Premium Rider and a Critical Illness Rider to the same life insurance policy. However, it depends on the availability of the rider with the policy that you choose.

3. Do riders increase my premium cost? 

   Yes, adding riders does raise the cost of your premium as they come at an additional nominal cost. This increases the overall cost of buying the policy.

4. Are riders available in all life insurance policies?

   Yes, usually all types of life insurance policies allow riders that can enhance the scope of coverage.

 

Sources

1. https://health.economictimes.indiatimes.com/news/insurance/what-is-critical-illness-rider-and-why-its-a-must-buy-with-your-term-plan/95140294