Critical Illness Rider

What is a Critical Illness Rider?

A critical illness rider is an add-on to a life insurance policy that stipulates that should the insured be diagnosed with a qualifying critical illness, they can access their policy’s benefit while alive.

Life insurance riders

Riders are features life insurance policy owners can add to their policies to modify or increase coverage. A critical illness rider is an option many life insurance providers offer for a small additional cost, which gets rolled into the policy’s premium.

How critical illness riders work

With this rider in place, the insured has the option to access a specified portion (usually, a set percentage) of their policy’s death benefit if they get diagnosed with a critical illness.

The life insurance company will have parameters about what qualifies as a critical illness. Some common qualifying conditions include:

Kidney failure
Heart attack
Terminal diseases
Some chronic conditions
Once the insured is diagnosed with a qualifying illness, they can file a claim against their life insurance policy. Assuming the insurer deems the claim legitimate, they’ll distribute a sum of money — usually stipulated by the terms of the rider — to the insured.

Using critical illness rider benefits

The insured receives their critical illness benefit as a lump sum of money. That means they have the flexibility to use it however they want or need. That could be to pay for:

Treatment that isn’t covered by their health insurance
A live-in caregiver
Expenses while they’re unable to work
Transportation to and from doctor’s appointments and treatments
Really, the money can be used for virtually anything. It could even go toward a bucket-list vacation.

Be advised, though, that any amount used toward a critical illness benefit gets subtracted from the life insurance policy’s death benefit. People who need to protect their death benefit to financially safeguard their loved ones should be cognizant of this fact. That said, using a portion of your death benefit while you’re alive to cover critical illness expenses can prevent you from leaving family or friends with medical debt.

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