Life Insurance Critical Illness Rider or General Insurance Critical Illness Benefit – Which is the Best?

Critical illness (CI) policy primarily covers the first diagnosis or occurrence of named critical illnesses and surgical procedures like Cancer, First heart attack, End stage renal failure, major organ transplant, stroke, heart valve surgery, coma, paralysis, total blindness etc.

Coverage of these deadly and serious diseases under a separate insurance policy like CI becomes extremely important because: firstly the sum insured under normal health insurance is not sufficient to cover such long going and expensive treatment costs and secondly there may be large waiting periods and specific exclusions that normal health policies are not so good for covering of CI.

In comparison to a normal health insurance like individual or family floater policy covering hospitalization which are indemnity policies, critical illness policy is a benefit policy. Indemnity policies cover hospitalization or other medical costs as per terms of the policy and upto the actual expenses incurred subject to total sum insured under the policy whereas benefit policies provide a lump sum benefit on first diagnosis or occurrence of any listed critical illness or surgical procedure.

The critical illness policy is available in the market with all public sector and private non-life insurance companies, life insurance companies and health insurance companies. It is available with life insurance companies as a standalone product or more generally in a form of a add on cover/rider which they sell with term insurance, endowment and other investment plans. For general and health insurance companies, again this may be a standalone product or available as a rider with health insurance indemnity product.

As all of them provide cover based on the same concept, sometimes the customer gets confused which one to opt for. Well, in this article we will discuss some points that will help you to choose the best critical illness policy and some factors you should consider that will assist you decide whether to go with a general, life or health insurer for purchasing the same.

  • Life insurance policy is a long-term contract with prefixed same premium throughout the policy term which can be as high as 80 years, once opted for a CI rider under life insurance policy the customer need not to renew the policy every year and can save himself from premium spikes due to health issues emanating later and medical underwriting issues. In contrast a CI policy from a general or health insurer needs to be renewed every year in which premium increases with age and may have underwriting issues as well.


  • CI Policies generally have a maximum renewability defined. This point is more relevant of CI products with general and health insurers. It is great if the policy provides lifelong renewability so that a person is not left without insurance cover at old age as this is the period when he will need it the most.


  • Many critical illness policies trigger the pay-out only when the disease reaches at a specified severity level and others may have a pay-out structure triggering from the very basic diagnosis of the disease. One should look out for a policy that covers the disease from the very beginning which will help initiating the treatment at a preliminary stage and increase the chances of getting cured.


  • Life insurance CI riders may have a waiver of premium option which waives all the future premiums once the policyholder is diagnosed with a covered critical illness. This can be quite helpful at times of financial distress.


  • We need to look out for the number of critical illnesses covered in the policy whether we go with any insurer. There are policies available in the market covering from 10 to 34 critical illnesses. The more illnesses covered the better it is for the customer. Some of the CI’s covered will always be common but one should look out for some of the specific critical illnesses they have in mind or fear most to get it be covered under the policy.


  • CI Riders offered with health insurance policies may have the same or lesser sum insured as the base plan. Say if you hold a health insurance cover of 500k then the CI sum insured offered may be 500k only which may not be sufficient to cover the CI treatment costs. But in life insurance CI riders and general insurance CI products sum insured can go upto few of crores rupees.


  • Cost of the policy is one of the important factors, one should compare the cost of going with a life, general or health insurer with the sum insured and facilities one is getting under the policy. A bit of research at your end is always better than going by someone’s words and later repenting over the same.


  • Women should be checking that women specific CI’s e.g. breast, ovarian and cervical cancers are covered with the policy or not and at what stage.


  • Most CI policies will come with a waiting period of say 90 days, lesser the waiting period better it is for the customer.


  • Look if there are any discounts available under the policy you are going to purchase like online purchase discount, long term policy discount etc. This will certainly help you to save a few bucks on premium and which one should always do.


  • Last but not the least choose an insurer which has a good claim settlement ratio and great customer service team.


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