Before the opening of the private sector, life insurance in India was taken as a plain vanilla product. There were no riders to attach to the policy except the accidental death benefit (ADB). The introduction of riders like Critical Illness and Accelerated Sum Assured by the private sector has made the life insurance more attractive and beneficial.

The critical illness and accelerated sum assured riders offered by the private insurers cover diseases like cancer, heart attack, kidney failure etc. In case of both these riders, an amount equal to the sum assured is paid to the policyholder on diagnosis of the covered critical illness. Whereas, the policy terminates soon after this amount is paid in case of the accelerated sum assured rider, in case of the critical illness rider, it continues to be in full force except that the critical illness cover would not be paid again. The other benefits of the policy continue to remain in force.

These benefits in the form of riders are different from Mediclaim. Whereas in case of a mediclaim policy, hospitalisation is a must, critical illness cover would be paid even if no hospitalisation were to take place.

Secondly, mediclaim is a reimbursement, which can be claimed only after one produces the bills thereof, whereas, critical illness is a cover and there is no need to produce the bills.

In case of mediclaim, although a person may have a policy for Rs 500,000 but if the expense incurred on the illness is Rs 150,000, the reimbursement would be limited to a maximum of Rs 150,000 even though the premiums were paid for a 500,000 cover.

In case of critical illness, an amount equal to the sum assured would be paid to the policy holder irrespective of the medical expenses on diagnosis of the critical illness. The policyholder has the liberty to spend the critical illness benefit as he pleases and he is not bound to spend it only on the illness.

With the advancement in medical sciences and health care services, more and more people are likely to survive these diseases/illnesses, however, they could severely impair the individual’s physical and financial condition. It is anyone’s guess if he could resume his normal day-to-day duties as earlier. Moreover, these diseases continue to account for a large percentage of deaths even now despite the progress in medical sciences.

It makes a lot of sense to attach this particular rider to your policy. In case, if you already have a mediclaim, this will serve as a perfect foil to it as we have highlighted the two are different and serve different objectives.

If you are interested to know more about these riders and how they can be effectively used to take care of most of the eventualities of life, please register here.

Add Comments