Life Insurance Quotes

Considering a critical illness rider on life insurance coverage

09/15/11

According to the Economic Times, life insurance policy holders may want to consider carrying a critical illness rider on their policy to provide coverage in the event that the insured contracts a serious health event such as organ failure or stroke, or is diagnosed with a dangerous degenerative disease like cancer.

A critical illness rider covers a specific set of serious illnesses, and can be activated by a policy holder in the event of a covered disease's contraction. The rider is usually purchased with a lump-sum payment, and covers extra costs incurred as a result of the illness, but will not cover standard health care costs like hospital bills more often covered with a mediclaim or health insurance.

Unlike a mediclaim, however, the complete amount assured is paid out in a critical illness rider regardless of use, and the lump sum payment is usually less than or equal to the assured amount, according to the source. Critical illness benefits often don't cover preexisting conditions and many include a survival clause that stipulates the insured must survive for a certain amount of time in order to receive payments.

According to a 2010 LIMRA study cited by the Insurance Information Institute, only about one out of every three Americans has individual life insurance coverage, the lowest level in 50 years. 

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