Term insurance plans have become one of the most popular financial products. This popularity can be attributed to their affordability, convenient access to a sizeable cover amount, flexibility and customisation via riders, and increased awareness about the financial safekeeping of a family during the absence of the sole breadwinner.

Now, while, in general, availing of term insurance plans is almost always a smart financial move, there are a few riders that can help you tap into the full potential of these policies. One such rider is the critical illness add-on. Considering the recent rise in health complications (thanks to our lifestyle, eating habits, environmental factors, and more), staying prepared for a critical ailment seems like a great decision, especially considering these riders ask for minimal additional premiums.

At such affordable rates, you have access to a perk under which, upon being diagnosed with a critical illness (among the ones listed by the life insurers), the provider offers you a lump sum to be used at your discretion. This sum can be set aside to meet the future financial requirements of your family or can cater to any current financial liabilities. Considering that such an ailment can render you jobless and with a seriously compromised source of income, such funding will be substantially useful.

Needless to say, term insurance plans with critical illness riders have become quite popular among policyholders. Here is a look at a few of the best policies with this rider in place!

Best Term Insurance Plans with Critical Illness Rider

Best Term Insurance Plans with Critical Illness Rider
Best Term Insurance Plans with Critical Illness Rider Critical Illness Details Drawbacks
Max Life Smart Secure Plus Number of illnesses covered: 22/40/64 illnesses (3 variants)
Coverage offered (maximum): ₹50 lakhs (in the case of 40 ailments)
Terminal illness perk disburses only a pre-decided share of the total sum assured and not the total amount.
Bajaj Life Smart Protect Goal Number of illnesses covered: 55 illnesses
Coverage offered (maximum): ₹50 lakhs
No terminal illness benefit
No zero-cost option
No top-up to boost your term cover
TATA AIA Maha Raksha Supreme Number of illnesses covered: 40 illnesses
Coverage offered (maximum): ₹1 crore
Terminal illness perk disburses only a pre-decided share of the total sum assured and not the total amount.
ICICI Prudential iProtect Smart Number of illnesses covered: 34 illnesses
Coverage offered (maximum): ₹1 crore
No option to boost the cover amount along with the inflation
No payouts in the case of total permanent disability
HDFC LIFE Click 2 Protect Life Number of illnesses covered: 19/60 illnesses
Coverage offered (maximum): ₹1 crore
Critical Illness payouts are offered 15 or 90 days (depending on the variant) after the ailment is diagnosed.
Accelerated critical illness isn't an option

(The case in consideration is a healthy 35-year-old non-smoker man with a plan till he turns 65 years with a cover amount of 2 crores)

As you can see, when choosing a term insurance plan with a critical illness rider, you can’t just factor in the size of the cover amount available or the number of critical illnesses covered under the policy. So, let’s take a look at the determining factors when choosing such term insurance policies -

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How to Determine the Best Critical Illness Term Insurance Plans?

A. THE LIFE INSURER

  1. The Credibility of the Insurer - One of the primary checkpoints when choosing a term insurance plan with a critical illness rider is the provider's credibility. Please remember that you are dealing with a term insurance policy, which is crafted to act as your financial replacement. Thus, the cover amount is often in crores, so you need an insurer whom you can trust with a hassle-free claim settlement process and high chances of future sustainability. To ensure this, opt for a life insurer with a -

B. THE TERM INSURANCE PLAN + THE CRITICAL ILLNESS RIDER

1. The total cover amount - While it’s true that you are looking around for a policy with the best critical illness (CI) rider, the base policy is equally, if not more, important. So, use a free tool to compare some of the most popular term insurance policies and then opt for the best term plan that is aligned with your financial bandwidth (in terms of its premium affordability), is yet feature-rich and comes with not just the best CI rider but a few other crucial add-ons as well.

One of the most important features of such policies is their base coverage. Expect the underwriting team to consider your educational qualification, financial stability, and age as eligibility factors before offering you the maximum coverage amount you can avail yourself of. You can also calculate the ideal cover amount for your family before you tally the plans to finalise the best policy that caters to your requirements.

2. A Few Other Important Riders - Critical Illness is but one crucial term insurance rider to have in your policy. However, there are a few more add-ons that can be considered equally significant - Waiver of Premium, Increasing/Decreasing Cover Option, Total and Permanent Disability Rider, Accidental Death Benefit Rider, and Life Stage Benefit.

3. The Critical Illness Cover Amount - Each critical illness perk comes with a capped amount, that is, the maximum amount the insurer can offer in case you are diagnosed with a critical ailment. This amount, in the case of the best-term insurance plans, may extend from ₹50 lakhs to ₹1 crore. Make sure that when choosing a policy with a critical illness rider, you check out this sub-limit.

4. Type of Critical Illness Offered - Critical Illness Rider are of two types -

  • Standard Critical Illness Rider - The offered critical illness amount is over and above the base sum assured.

So, say you have a term insurance plan of ₹2 crores with a critical illness rider with a capped amount of ₹50 lakhs. Now, a few years into the plan, you are diagnosed with a critical ailment (one that is included in the list by your insurer). You offer your provider proof of this diagnosis, and the provider disburses ₹50 lakhs. However, this isn’t deducted from the base cover amount of 2 crores.

So, when the policyholder passes away (during the tenure of the term insurance plan), the beneficiary will receive a total cover of ₹2 crores.

  • Accelerated Critical Illness Rider—In this case, the cover amount for the critical illness rider is deducted from the base sum assured. So, when a policyholder with a critical ailment passes away (and has received a lump sum under the CI rider) during the plan's tenure, the payout received by the beneficiary is less than the original base cover amount.

When choosing a term insurance plan with a critical illness rider, try to ensure that the insurer offers both options; otherwise, opt for a plan that offers you your preferred variant of CI rider.

 5. The Number of Critical Ailments Covered - One of the most crucial components of a Critical Illness Rider is the number of ailments covered by your insurer. This number often creates variants under a term insurance policy and determines the additional premium amount to be paid for this rider. Needless to say, a CI rider with a high number of ailments covered is always the best option ahead.

Now you know how to choose a term insurance plan with a critical illness rider. So, let’s now list out the best term insurance plans with CI riders.

What are the Best Term Insurance Plans with Critical Illness Rider?

  1. Max Life Smart Secure Plus

This is a great pick from the stable of Max Life, one of the largest private insurers in the country. It’s a comprehensive and affordable term insurance plan that offers almost all possible perks, including -

  • Accidental Death Benefits,
  • Zero Cost Term Plan Options,
  • Option to boost the cover to match the inflation spike,
  • Waiver of Premiums in the case of accidental total and permanent disability and the diagnosis of a critical ailment,
  • Critical Illness Rider,
  • Top-up option to boost the cover amount after the purchase of the policy,
  • Total Permanent Disability Rider,
  • An in-built terminal illness rider
  • Maturity benefits via premium returns

This is also one incredible term insurance plan for smokers, considering that the plan offers cheaper premiums for smoker profiles as compared to others from its category.

Drawbacks: While the terminal illness benefit is an in-built perk, upon the diagnosis of a terminal ailment (with a poor prognosis and a few months to live as has been declared by the doctor in a written format), the insurers don’t disburse the complete sum assured, only a part of it.

 2. Bajaj Life Smart Protect Goal

This is a decent pick from the Bajaj Allianz life stable. The Smart Protect Goal is mostly a comprehensive policy offering multiple perks in the form of -

  • Accidental Death Benefit
  • Inflation-based boost of the total sum assured
  • Critical Illness Rider
  • Total and Permanent Disability Rider
  • Maturity benefits via premium returns

However, this policy has a few caveats that make it a questionable choice.

Drawbacks: The Critical Illness Rider with the Bajaj Life Smart Protect Goal plan does not have the Accelerated option. You can only avail of the standard CI rider variant in which the CI amount is over and above the base sum assured. Additionally, the plan doesn’t have a Zero Cost Option, terminal illness benefit, top-up option, or Waiver of Premium. Add to this the fact that Bajaj Allianz Life is not yet among the top insurers (but is swiftly rising to become such), and you will know why you should consider other term insurance plans with critical illness riders.

 3. TATA AIA Maha Raksha Supreme

This is one of the industry's most affordable term insurance plans and has hence become quite popular among policyholders. TATA AIA’s excellent credibility metrics across Claim Settlement Ratio, Amount Settlement Ratio, and complaint volume, accompanied by the plan’s lineup of features, offer it the much-required edge over the other plans in its category.

Under the TATA AIA Maha Raksha Supreme policy, the extended perks include -

  • Accidental Death Benefit
  • Waiver of Premiums in the case of accidental total and permanent disability and the diagnosis of a critical illness,
  • Critical Illness Rider,
  • Total Permanent Disability Rider

The plan rarely has any drawbacks. However, there is a single restriction that might seem like a caveat for policyholders planning to avail of this plan.

Drawbacks: Considering the comprehensiveness of this policy and the credibility track record of the insurer involved, it is evident that most policyholders will want to take advantage of this plan. Unfortunately, the plan is only available for those with an income slab of over ₹15 lakhs/annum and opting for a cover amount of more than ₹2 crores.

 4. ICICI Prudential iProtect Smart

This is an incredible pick as a term insurance plan with a critical illness rider—it’s pocket-friendly, comprehensive, and feature-rich. The policy even offers a cheaper premium to policyholders with smoking profiles. This is an incredible perk, considering that the premiums for smokers can often reach as high as double the premiums fetched from non-smoker policyholders.

Among the list of its features are -

  • Accidental Death Benefit Rider
  • In-Built Zero Cost Term Plan Option
  • In-Built Terminal Illness Benefit
  • In-Built Life Stage Benefit Option
  • In-built waiver of Premium in the case of total permanent disability
  • Maturity benefits in the form of premium returns (rider)

Drawbacks: The plan doesn’t offer an option to boost your base cover amount based on inflation and has no riders for total and permanent disability. Additionally, the policy provides no Accelerated options in the case of its Critical Illness Rider, just the standard option under which the provided payout is over and above the base sum assured.

 5. HDFC LIFE Click 2 Protect Life

HDFC Life is one of the best life insurance providers in the industry, with incredible credibility metrics data for the last 3 years. Considering that Click 2 Protect Life is a policy from this stable, it can be a decent pick if you are looking for a term insurance policy with a critical illness rider. The plan has a few lucrative features to offer -

  • Accidental death benefit rider
  • Waiver of premium for cases of critical illness and total and permanent disability
  • Total and permanent disability rider
  • Critical illness rider
  • Maturity benefits in the form of premium returns

Drawbacks: Unfortunately, compared to other policies in its category, the Click 2 Protect Life plan from HDFC Life offers limited features. The plan lacks features like a zero-cost option, terminal illness benefits, a top-up option, and an inflation-based boost in cover amount. Additionally, like most plans from HDFC Life's stable, this policy is also comparatively expensive.

Should You Opt for A Term Insurance Plan with Critical Illness Rider?

Health complications are on the rise, considering the issues with our current lifestyle, food, and REM cycles. The sudden global pandemic didn’t help with this concern either. Naturally, seeking financial protection to help you and your family in the case of such critical ailments is only natural. Additionally, think of this - in case you are diagnosed with a critical disease, your source of income will be severely compromised since you will need time to get treated and rest.

This is where a term insurance plan with a critical illness rider comes into play. The insurer will offer you a lump sum that may or may not be a part of your base sum assured. This amount can be used to meet your current financial liabilities or save it for future use. Also, this significant funding comes as a pocket-friendly addition to the premium.

Hence, critical illness riders remain among the most common, affordable, and popular recommendations in term insurance add-ons.

Conclusion

Term insurance plans in their vanilla variant lack many customisation options since the insurers are usually pretty stringent about not enabling any alterations to the base plan. Hence, you need a few riders to bring forth the customisation perk across such policies. While the recent client demand and requirements have led to several new riders, some remain evergreen and value-worthy, like Critical Illness. Thus, purchasing a term insurance plan with a critical illness rider is smart, provided you have compared plans to get an affordable premium that offers coverage for a maximum number of ailments.