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What is a Critical Illness Rider?

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A critical illness rider, like other riders, extends the benefits of a standard insurance policy to add flexibility when creating a customized insurance product.

This rider, a subset of an accelerated death benefit rider, is one of many add-on or supplemental riders a policyholder can opt to include in a base life insurance policy.

Depending on one’s specific needs, lifestyle, and current state of health, insurance riders add an extra layer of financial protection for policyholders and their loved ones when they need it most.

Keep reading to find out if adding the critical illness rider to your life insurance policy is right for you.

How Does A Critical Illness Rider Work?

This rider can offer a helping hand by offsetting medical bills incurred as a result of a policyholder’s terminal illness diagnosis.

Instead of worrying about paying off mounting expenses or leaving loved ones with debt, the insured can focus on treatments and preserving quality of life.

A critical illness rider allows the insured to collect a portion of the policy’s death benefit (also referred to as an accelerated death benefit) to pay for medical and other expenses if diagnosed with a terminal illness by a licensed doctor or physician.

Policyholders can also use the corresponding death benefit to pay for long-term care, if necessary.

In actuality, though, the proceeds can be used however the insured sees fit.

Also categorized as a living benefit, this rider pays the insured an income-tax-free lump sum.

The policyholder is then faced with two choices upon diagnosis:

  1. Accelerate and make accessible a portion of the benefit (typically between 40 to 80 percent) while he or she is still living, under certain circumstances.
  2. Bundle the entire payout as a traditional death benefit for designated beneficiaries.

If choosing the first option, the insurance company you’re working with will evaluate relevant factors, such as the type of terminal illness and life expectancy upon diagnosis, to determine the accelerated benefit lump sum.

The amount could be a percentage or a figure equal to the base policy coverage you agreed to.

During this process, the insurance provider may contact your doctor or physician to review any corresponding medical records.

How Do You Get a Critical Illness Rider?

This add-on provision is not often included as standard practice with life insurance policies, though it’s becoming more popular.

It is typically a low-cost rider and may even be included without charge by certain insurance providers.

Its own inherent value far exceeds the monetary value, though. The critical illness rider helps ease the financial burdens of families coping with a policyholder’s recent terminal illness diagnosis.

The insurer may set a cap on the amount it will allocate, and the insurance company can include this rider when the insurance policy is first written.

Who is Eligible for a Critical Illness Rider?

Like most riders, there are a host of conditions, limitations, and exclusions which come along with a critical illness rider.

Eligibility requirements usually include an age range, with a cap between 65 to 70 years old, depending on the specific insurance company.

Coverage often begins with the terminal illness diagnosis.

Some insurance companies stipulate the insured must survive at least 30 days afterward to collect the benefit. Providers often won’t pay until the time has passed.

What are the Criteria for a Critical Illness Rider?

Insurers have specific criteria for what defines critical illness, as well as the parameters within each type of critical illness.

The greatest variability exists between which illnesses are covered by which insurance companies.

Although this is by no means an exhaustive list, insurance companies will generally cover conditions or illnesses such as the following:

  • Cancer, Alzheimer’s disease, ALS, or Parkinson’s disease
  • Strokes, loss of speech, coma, and seizures
  • Heart attacks or coronary artery bypass
  • Major organ transplants, major burns, or loss of limbs
  • Autoimmune diseases
  • Paralysis or blindness

However, even within these seemingly straightforward criteria, there exist some differences.

Cancer, for example, is not just one disease but a complex group of conditions. Insurance companies will often apply the term “of specified severity” to illnesses such as cancer or a heart attack.

While it may seem cold-hearted for insurance carriers to stipulate such specific critical illness criteria, it realistically reflects the different survival rates of these conditions.

Critical illness, in insurance-speak, means a condition shortening the insured’s lifespan, or life expectancy.

For example, the 5-year survival rate for pancreatic cancer is less than 10 percent, whereas the rate for prostate cancer is 99 percent.

Likewise, rider coverage for stroke often specifies permanent symptoms.

The criteria for heart attacks also carry specific conditions, such as elevation of infarction specific enzymes. But it also excludes others, like angina pectoris.

Some critical illness riders offer tiered coverage.

A basic option will include the major four health conditions (Heart attack, coronary bypasses, cancer, stroke, organ transplants), while an upgraded rider will cover a greater range of illnesses.

Insurance companies may include heart valve surgery or major head trauma to their lists of covered medical conditions with an upgraded rider.

These additional health issues will also have specific criteria defining severity within each one’s framework.

Are There Exclusions to a Critical Illness Rider?

The fine print for a critical illness rider will include a plethora of exclusions for which it will not pay. Some exclusions relate directly to the critical illnesses the protection covers.

For example, the protection often will exclude health issues if they are a result of a pre-existing condition.

Likewise, the rider may not cover critical illnesses occurring before 90 days into the coverage.

Other exclusions include lifestyle factors, such as participation in what is deemed as hazardous activities.

It behooves the insured to investigate these criteria since the insurance companies often cast a wide net for these pursuits. The scope may include obvious choices like skydiving, but insurance providers may also add more mundane activities, like hunting or martial arts, to their lists of exclusions.

Some critical illness riders will also include exclusions beyond the control of the insured, such as acts of war or terrorism.

Military activity during peacetime may also make the exclusions list. 

The existence of these exclusions doesn’t mean the insured cannot participate in these activities, though. Rather, any critical illnesses occurring as a direct result of any of them will not be covered.

Should You Add a Critical Illness Rider?

Because of the stipulations and exclusions typical of the critical illness rider, it makes good sense to evaluate the terms of the rider to avoid any unfortunate surprises or unanticipated fine print down the road.

However, if you have stashed away enough savings to circumvent attaching this rider (and possibly paying any add-on fees to your monthly base premium), then move confidently along your path toward becoming self-insured.

If you’ve been diagnosed with an unforeseen terminal illness, but you’re worried about financially burdening loved ones with long-term care or treatments, consider supplementing your standard life insurance coverage with a critical illness rider today.


Jason Fisher

Jason Fisher is the founder and CEO of, LLC. and a multi-state licensed life insurance agent who has helped over a million Americans seek out affordable coverage, compare quotes, or get their family and businesses covered.