• From: sbistcbangalore@xxxxxxxx
  • To: sbinews@xxxxxxxxxxxxx
  • Date: Tue, 23 Dec 2003 07:10:46 +0500

 Life cos get 'critical' with illnesses

Several life insurance companies have been in the news recently for having 
introduced critical illness riders. A rider is an add-on benefit that is 
offered with the base policy at a nominal price. 

The sum assured on the rider is restricted to the sum assured on the base 
policy and in most cases further restricted to Rs 5 lakh. The term of the rider 
is equal to the term of the base policy. Suppose you have taken a term policy 
for 20 years, your rider will also be for 20 years unless a claim is made. If a 
rider claim is made, the rider is terminated. The premiums on the riders are 
available for rebate under Section 88 of the Income-Tax Act, 1961. 

A critical illness rider is mainly to cover the huge expenses that are incurred 
if you are diagnosed with a serious illness. The rider covers a certain set of 
critical illnesses, which are fixed by the insurance company and if the 
policyholder is diagnosed with any of these illnesses at any time during the 
policy term, he would get benefits under the rider. However, the flipside for 
the policyholder is that once diagnosed with any one of the illnesses, the 
rider would terminate. 

Another important clause to remember with respect to the critical illness rider 
is the timing of the claim. Almost all companies have a restrictive clause, 
which is mostly not clearly disclosed in the policy document. In order to make 
a claim under the critical illness rider, the policyholder must survive for at 
least 30 days after the diagnosis. This period of 30 days varies from company 
to company. Although, the benefits are not held back for the said period and 
are paid out immediately on diagnosis, when death occurs, the death claim is 

Today, if you take a careful look at the insurance market, then almost all life 
insurance companies offer this rider. Hence, if you want to take such a rider 
to cover risks on this front, you should be aware of companies, which cover 
different illnesses. Thus, what makes the rider of one company different from 
the other is the number of critical illnesses covered by each. While some 
companies like HDFC Standard Life and SBI Life cover up to six critical 
illnesses in their riders, there are others that cover around 12 or 13 
illnesses. Birla Sun Life launched its critical illness rider recently, which 
offered a cover for 17 illnesses. 

So, if this rider is going to play an important role in your choice of an 
insurance company, then you must look at the number of illnesses and the extent 
to which these are covered. Also, note the cost involved in the process. This 
will ensure that you get the most out of your rider. 

The basic illnesses that are covered by all insurance companies are cancer, 
coronary artery bypass graft surgery, heart attack, kidney/ renal failure, 
major organ transplant and stroke. Apart from these illnesses, each company 
offers a set of illnesses in its rider. Other common illnesses are heart valve 
replacement, blindness, burns, paralysis and so on. The table gives the details 
of illnesses covered by the insurance companies apart from the basic illnesses 
mentioned above. Corresponding premiums have also been indicated. In all cases, 
the premiums may not be directly related to the number of illnesses covered. 
Thus, you can get a good deal depending upon your specific needs. 

Further, in cases like SBI Life, the rider is available for a maximum term of 
ten years. In case of Allianz Bajaj, the premium includes a hospital cash 
benefit, wherein, reimbursement is made toward other hospital bills such as 
room charges.So, while each company may offer the critical illness rider, you 
must read the finer print before you take your call. 

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