Term Insurance with Critical Illness Rider: What are the Best Picks?

In recent years, India has witnessed a significant rise in critical health issues, with heart disease and cancer being at the forefront. In 2022 alone, heart attacks led to over  32k deaths, a 12.5% increase from the previous year. Meanwhile, cancer cases have been steadily climbing, with 2024 seeing over 15 lakh new cases. These alarming statistics underscore the pressing need for comprehensive health coverage that offers financial support in the event of severe illnesses.

This is where term insurance with critical illness rider becomes essential. This rider adds an added layer of protection, ensuring that if you're diagnosed with a major health condition like heart disease or cancer, your loved ones won’t have to bear the financial burden. By combining the benefits of life cover with critical illness protection, this type of insurance provides comprehensive coverage, offering peace of mind during challenging times.

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Overview

What is Term Insurance with Critical Illness Rider?

Term insurance with critical illness rider is a bundled life insurance plan that offers dual protection—providing a payout to your family in case of your untimely death while also offering financial support if you're diagnosed with a major illness like cancer, heart attack, or stroke during the policy term. 

Now, let’s break down what a rider is. A rider, also known as an add-on, is an optional benefit you can attach to your base term plan by paying a slightly higher premium. It’s like customising your policy to suit your needs. In this case, a critical illness rider gives you a lump sum payout upon diagnosis of a covered illness, helping you manage medical bills, replace lost income, or fund recovery-related expenses. 

Unlike standard term insurance, which only pays after death, this rider ensures you get financial assistance while you're still alive and battling a serious condition. By combining both life cover and critical illness protection in a single plan, term insurance with critical illness cover offers holistic financial security—one premium, two layers of powerful protection.

How Does a Term Insurance with Critical Illness Rider Work?

Let’s say you buy a term insurance plan with a ₹1 crore life cover and add a ₹20 lakh critical illness cover. A few years down the line, you're diagnosed with a serious illness like cancer or a major heart condition. If your diagnosis meets the policy’s severity criteria (and you survive the minimum required number of days—usually 10 to 30), your insurer pays out a lump sum of ₹20 lakh, without needing hospital bills or treatment cost proofs—just your diagnosis and supporting medical records.

Now, what happens next depends on the type of rider payout:

1. Accelerated payout: The critical illness payout is treated as an advance against your total cover. So if ₹20 lakh is paid for a heart attack, your remaining life cover is reduced to ₹80 lakh. 
2. Standard payout: You get the ₹20 lakh payout, and your base ₹1 crore life cover remains fully intact. So if death occurs later, your nominee still gets the full sum assured.

And here’s something most people miss: once the critical illness benefit is paid, you don’t have to pay the rider premium anymore. That means your overall premium reduces on a proportionate basis going forward. You’ve already used that part of your cover, so you’re no longer charged for it.

Also, thanks to IRDAI’s 2024 regulations, insurers are now required to fix rider premiums for the entire policy term, so adding the rider at inception locks in your cost early and keeps it affordable for the long run. However, this regulation has also had a negative impact, with insurers cutting the length of the rider policy term/tenure short.

Terminal Illness vs Critical Illness: A Crucial Distinction

These two may sound similar, but they are entirely different in how they work:

The key takeaway? Terminal illness benefits are harder to claim—they require two independent medical opinions and confirmation of death within six months. In contrast, a critical illness rider is far more practical, as it pays out when you're alive, undergoing treatment, and actually need the financial support.

Ditto’s Take: A critical illness rider is one of the smartest add-ons you can include in your term plan—especially if you’re in your 20s to 30s, with dependents and growing responsibilities. You’re paying a small premium to unlock a major safety net, and if a critical illness strikes early (when your savings are still building), this rider can be a financial lifesaver. We usually recommend taking a payout equivalent to at least 6 months to 1 year of your income, maybe more if your lifestyle demands it. And remember: this isn’t a substitute for health insurance. It’s a powerful supplement that fills the income gap when you’re too sick to work but still need to keep life running.

List of Diseases Covered Under Critical Illness Term Insurance

The most commonly covered conditions under critical illness riders include cancer, heart attack, stroke, and kidney failure. However, different plans cover a different number of illnesses, generally ranging between 10 and 64. The table below illustrates the number of illnesses covered by the Critical Illness Rider for the top 5 term insurance plans according to Ditto:

* ICICI offers accelerated CI, meaning the payout amount is subtracted from the term insurance base cover. For the other 4, the payout is over and above the base cover.
**: TATA AIA CI rider is renewable in 5-year intervals, subject to their underwriting guidelines, till age 75 or the base plan tenure end (whichever is earlier).

Exclusions in a Critical Illness Rider

While a critical illness rider offers valuable coverage, it's important to understand that there are certain exclusions to be aware of. These define the conditions under which your claim may not be accepted. Here are the key exclusions in most critical illness riders:

• Non-disclosure of Medical History / Pre-existing Illnesses: When applying for a critical illness rider, insurers typically ask for your medical history. If you fail to disclose any pre-existing conditions (illnesses that you already have when purchasing the policy), the insurer may reject your claim. For example, if you're diagnosed with heart disease before purchasing the rider but don't inform the insurer, and later you file a claim for cardiac issues (or even other ailments), the insurer may deny the claim due to non-disclosure.
• Self-inflicted Injuries or Lifestyle Exclusions: Critical illness cover does not extend to injuries or conditions that result from intentional harm or reckless behavior. This includes self-inflicted injuries, such as those from attempted suicide, or lifestyle habits like substance abuse. Additionally, certain lifestyle-related diseases caused by habits like excessive smoking or alcohol consumption might be excluded depending on the insurer's terms. Therefore, it is always important to check the specific exclusions listed in your policy to understand the limits.
• Waiting Periods and Survival Periods: A waiting period is the time frame after policy issuance during which no claims for critical illness can be made. This typically ranges from 30 to 180 days from the date of policy issuance or revival, depending on the insurer. If you’re diagnosed with a critical illness within this waiting period, you won’t be able to claim the rider benefits. Survival periods also come into play — these are the number of days you must survive after being diagnosed with a critical illness in order to claim the payout. For example, after being diagnosed with cancer, you may need to survive for at least 30 days before the insurer pays out the lump sum. If you don’t survive the survival period, the claim may be rejected, and only the death benefit may be paid out if you’re still within policy tenure.
• War & Civil Unrest: Illness from war, invasions, riots, armed forces duty, rebellion.
• Radiation/Nuclear Risk: Illness due to radiation, nuclear fuel, or biological attacks.
• Hazardous Occupations: Working in mines, tunneling, high-tension electrical work, race jockeys, and circus workers.
• Congenital or Genetic Disorders: Including developmental or inherited conditions.
• Adventure Sports: Illness caused during participation in activities like mountaineering, skydiving, scuba diving, etc.
• Flying Activities: Unless as a fare-paying passenger on a commercial airline.
• Pregnancy-Related: Illness from childbirth, miscarriage (unless accidental), abortion (except ectopic pregnancy).
• Unproven Treatments: Experimental or unscientific medical procedures.
• Unlicensed Practitioners: Diagnosis/treatment by unregistered or out-of-specialty doctors.
• Gender Reassignment: Treatments for sex change.
• Cosmetic Surgery: Unless for accident, burns, cancer, or certified as medically necessary.
• Obesity Surgery: Unless medically necessary, for BMI ≥40 or ≥35 with specific comorbidities.
• Alternative Therapy: Treatments in spas, hydros, nature clinics, or domestic-purpose admissions.
• Criminal Acts: Illness arising from criminal activities by the insured.
• Infertility Treatments: Includes sterilization, IVF, surrogacy, or reversal procedure

Understanding these exclusions is crucial for avoiding surprises when you or your loved ones need to make a claim. Always carefully read your policy documents and clarify any doubts with the insurer before signing the agreement.

Benefits of Term Insurance with Critical Illness Rider

Term insurance with a critical illness rider offers a range of benefits, ensuring that you and your loved ones are financially protected in the event of a serious illness. Here are the key advantages of combining life cover with critical illness protection:

• Lump Sum Payout on Diagnosis: Upon being diagnosed with a critical illness covered under the rider, you receive a lump sum amount. This payout helps cover medical expenses, treatment costs, and other financial needs. For example, if you're diagnosed with cancer, the lump sum can assist in paying for chemotherapy, surgeries, and post-treatment care.
• No Impact on Health Insurance Benefits: The critical illness rider does not affect your health insurance policy. It acts as a supplement to your health cover, providing additional financial support when you need it most. For instance, if you have health insurance that covers hospitalization but no coverage for critical illnesses, the rider bridges this gap by providing a lump sum payout on diagnosis, giving you an extra financial cushion.
• Income Replacement During Recovery: Recovering from a critical illness often means taking time off work, which could result in lost income. The critical illness rider can act as an income replacement during this period, helping you meet your day-to-day expenses and maintain your lifestyle without dipping into your savings. For example, if you're unable to work for several months after being diagnosed with a stroke, the payout from your rider can cover your regular income, ensuring you're financially stable.
• Tax Benefits under Section 80D, 80C, and 10D: Premiums paid for term insurance are eligible for tax deductions under Section 80C (up to ₹1.5 lakh), while the premium portion for the critical illness rider can be claimed under Section 80D — but only if you have opted for the old tax regime. Additionally, payouts received from the term insurance (on death) and from the critical illness rider (on diagnosis of a covered illness) are both tax-exempt under Section 10(10D), making it a tax-efficient way to secure your financial future.
• Financial Security Without Depleting Savings: A critical illness rider ensures that you don’t have to deplete your savings or take loans for medical treatments. The lump sum payout from the rider provides a financial buffer, enabling you to focus on recovery without worrying about how to pay for treatment. For instance, if you need to undergo a kidney transplant, the payout from the rider can help cover the expenses without tapping into your emergency fund or savings, ensuring you maintain financial stability.

In essence, the critical illness rider offers a layer of financial protection, providing you with much-needed support during tough times while preserving your long-term savings and income. It's an excellent tool for ensuring financial well-being in the face of serious health challenges.

Who Should Buy Term Insurance with Critical Illness Rider?

Term insurance with critical illness rider is an ideal choice for individuals in certain situations where financial security is crucial, especially in the event of serious health issues. Here are the key groups who should consider adding this rider to their term insurance:

• Primary Breadwinners: If you're the primary income earner in your household, your family relies on your financial support. In the event of a critical illness, your ability to work might be compromised, affecting your income. A critical illness rider ensures that your family is not left financially vulnerable while you focus on recovery. For example, if you're diagnosed with cancer and need to take time off work, the rider's payout can replace lost income, helping to keep your family's finances intact.
• Self-Employed Professionals: Self-employed individuals or business owners don't have the luxury of paid sick leave or employee benefits. If you're diagnosed with a critical illness, it could lead to a halt in your business operations or career, directly impacting your income. A critical illness rider provides a lump sum payout, giving you the financial flexibility to take the time needed for treatment and recovery without worrying about business expenses or lost earnings.
• Those with Limited or No Emergency Corpus: If you don't have a substantial emergency fund or savings to fall back on, a critical illness rider can be a lifesaver. The rider provides immediate financial support when you’re diagnosed with a serious illness, preventing you from depleting your savings or relying on loans. For example, if you don’t have an emergency fund and are diagnosed with a stroke, the rider’s payout can cover treatment costs, so you don’t have to dip into your savings.
• Individuals with a Family History of Critical Illnesses: If there’s a history of critical illnesses such as heart disease, cancer, or diabetes in your family, your chances of being diagnosed with one of these conditions may be higher. Adding a critical illness rider to your term insurance gives you additional protection, ensuring you have financial support in case you need it. For example, if heart disease runs in your family, this rider could help cover the medical expenses and other financial obligations if you're diagnosed with a heart attack.
• People Aged 35+ Years: As you age, the risk of developing serious health conditions increases. If you're over 35, adding a critical illness rider to your term insurance is a prudent decision. It ensures you have coverage for both life and critical illness, helping to safeguard your financial future. For example, at the age of 40, if you are diagnosed with cancer, the rider's payout can help cover treatment costs without impacting your long-term savings or the financial security of your loved ones. However, keep in mind that the premiums will be on the higher side due to older age.
• Housewives and Homemakers: Housewives and homemakers make immense contributions to the household, even if they don’t earn a formal income. Recognizing this, some insurers now offer term insurance with critical illness riders specifically designed for them. A critical illness can affect their ability to manage household responsibilities, which could lead to additional expenses like hiring external help. Having a critical illness rider ensures that the family can maintain stability at home during such challenging times.Example: If a homemaker is diagnosed with a serious illness and needs prolonged treatment, the payout can help cover the cost of caregiving support and medical expenses, easing the burden on the family.

All in all, term insurance with a critical illness rider is especially beneficial for those who want to ensure they are prepared for both life’s uncertainties and the possibility of serious health challenges. If you're in any of the above categories, this combination of life cover and critical illness protection could be a smart and cost-effective choice to secure your family's financial future.

Eligibility and Requirements

When considering term insurance with a critical illness rider, there are a few important eligibility criteria and requirements that you need to keep in mind:

• Age and Medical Screening: Eligibility for term insurance with a critical illness rider typically depends on age, with most insurers offering the rider to individuals between 18 and 65 years. However, the specific age range can vary by insurer. As you age, especially after 45-50 years, stricter underwriting criteria or higher premiums may apply. Additionally, additional medical screening may be required to assess your health, and pre-existing conditions like high blood pressure or diabetes can affect your eligibility or premiums. Other factors, such as occupation, lifestyle choices (smoking, alcohol consumption), family medical history, and rider sum assured limits, can also influence eligibility and premium rates.
• Riders are Available with Term Plans Only at Inception (Not Later): A critical illness rider is primarily available for purchase at the inception of the term insurance policy. This means that you cannot add the rider to your existing term insurance policy later on. It's crucial to add the rider at the time of purchasing the term insurance plan, ensuring you’re covered for critical illnesses right from the start. Once the policy is issued without the rider, you won’t be able to attach the critical illness rider during the policy term unless the insurer allows it under certain conditions, and the premiums for the same could be quite high. Therefore, it's recommended to consider adding the rider as part of your initial policy purchase if you want comprehensive coverage for both life and critical illnesses.

In conclusion, it's important to consider your age, health status, and the timing of adding the critical illness rider when purchasing term insurance. Early planning and a clear understanding of the eligibility criteria can ensure you don’t miss out on the added protection that a critical illness rider provides.

Ditto’s Take: When considering a critical illness rider, it's important to remember that the rider’s premium and cover cannot exceed the base term plan’s premiums and coverage. Insurers often impose stricter underwriting criteria for riders — especially if you’re older or have pre-existing health conditions. Plus, there are usually limits on the amount of coverage available under the rider, so it’s essential to check if the coverage actually matches your needs.

Also, make sure you go through the list of critical illnesses covered under the rider. Some policies only cover major illnesses, while others include a wider list. If possible, consult a doctor in your family or circle of friends — they can help you understand the probability of these conditions happening and the approximate treatment costs. This will give you a more realistic idea of whether the critical illness rider is truly worth it for you.

Documents Required to Claim Critical Illness Rider

To make a claim under a critical illness rider, you will typically need the following documents:

• Medical Diagnosis Certificate: A report from the treating doctor or hospital confirming the diagnosis of the critical illness, detailing the nature and severity of the condition.
• Policy Documents: The original term insurance policy document or a copy, which outlines the terms and conditions of the critical illness rider.
• ID/Address Proof: Proof of identity and address of the claimant, such as a government-issued ID card (Aadhaar, passport, voter ID) and utility bills or bank statements for address verification.
• Lab Reports: Relevant lab reports or diagnostic test results that support the diagnosis of the critical illness.
• Medical Records (Current & Past): Hospital records, previous medical records, or reports from diagnostic tests that support the diagnosis of the condition.
• Cancelled Cheque or Bank Passbook: A cancelled cheque or a copy of the bank passbook with your account details, as the claim payout will be processed via bank transfer.

These documents, along with the claim form, are required to process the claim under the critical illness rider. It's also important to ensure that all required medical reports, including the diagnosis and treatment details, are included, as insurers typically don't require treatment cost bills but rely on diagnosis reports for claims. Always check with your insurer for specific requirements and any additional documents that may be needed for your claim.

Key Points to Remember

Before you commit to a critical illness rider, it's important to keep a few key points in mind to ensure you're fully protected when the need arises.

Read Policy Wordings Carefully for Exclusions: It’s crucial to go through the fine print of your term insurance policy with a critical illness rider. Many riders come with specific exclusions, such as self-inflicted injuries, conditions arising from substance abuse, or illnesses not covered under the rider. Understanding these exclusions ensures that you are not caught off guard when filing a claim.

Understand the Waiting Period and Survival Clause: Most critical illness riders have a waiting period, typically ranging from 30 to 180 days, during which no claims can be made. Additionally, some riders also require a survival period (usually 10-30 days) after diagnosis before the claim can be processed. Be sure to fully understand these clauses to avoid any delays or rejections in the event of a claim.

Opt for Higher Cover if Your Lifestyle Demands It: If your lifestyle or family history suggests a higher risk for critical illnesses, it’s wise to opt for a higher cover from the start. At Ditto, we recommend picking a payout that can cover at least 6 months to a year of your income — or even longer if possible — to handle medical costs, income loss, and recovery expenses.

Remember, you won’t usually be able to increase your critical illness cover later under the same policy. If your needs grow, you might have to buy a new policy altogether — and it will likely cost much more because of your higher age or any new health conditions.

Ditto’s Take: When purchasing a term insurance with critical illness rider, remember to understand the nature and severity thresholds for covered illnesses. Be mindful of the waiting and survival periods, and take the time to decode insurance jargon. Treatment costs proof, or bills, aren’t required for claims; just the diagnosis report is sufficient. The payout is usually triggered after the diagnosis, once the necessary medical records are submitted. While health insurance covers all illnesses, it focuses on treatment costs, not income replacement or daily expenses. A standalone critical illness policy can be purchased independently, but Ditto recommends bundling it with term insurance for better cost-efficiency, as premiums remain locked for the entire policy term.

Comparison Table: Standalone Term Insurance vs Term Insurance with Critical Illness Rider

Pro Tip: If you already have health insurance, a critical illness rider acts as an income shield — not just a medical bill shield.

Best Term Insurance Plans with Critical Illness Rider in 2025

1. HDFC LIFE Click 2 Protect Super: HDFC Life Click 2 Protect Super is a comprehensive term insurance plan that offers strong customisation options and is backed by a reputable insurer. While it has an impressive claim settlement track record, it can be relatively expensive for some profiles.

• The plan boasts a high Claim Settlement Ratio of 99.2%, indicating that HDFC Life is highly reliable in paying claims.
• It maintains a low complaints ratio of just 2 per 10,000 claims, reflecting a good customer experience.
• It offers a range of add-ons, including accidental death benefit, waiver of premium on disability or critical illness, and total permanent disability cover.
• You can also opt for a step-up cover that increases your life cover in line with inflation. And with the life stage benefit, you can enhance your coverage at major life events, such as marriage and childbirth.
• One notable in-built feature is the zero-cost option, which allows you to exit the policy within a specified window and receive a refund of your premiums.
• The critical illness rider covers 60 illnesses and comes with a shorter-than-average 90-day waiting period. However, the critical illness payout comes with a 15-day survival clause and is paid in addition to the base cover, not as an accelerated benefit.
• The terminal illness benefit provides partial payouts upon diagnosis.

Overall, this is a dependable and well-designed term plan that offers peace of mind, particularly for those seeking greater flexibility. However, if affordability is a key concern, it may not be the most budget-friendly option.

2. ICICI Prudential iProtect Smart: ICICI Prudential iProtect Smart is a comprehensive term insurance plan that offers a good balance of affordability and benefits, making it particularly attractive for salaried individuals and smokers.

• It offers competitive premiums and a claim settlement ratio of 97.52%, alongside an amount settlement ratio of 92.1%, which reflects a fair payout behavior on claims.
• One of its key features is the life stage benefit, which enables you to increase your coverage after significant life events, such as marriage or childbirth.
• It also offers a Zero Cost Option that allows you to exit the policy within a defined period and receive a refund of your premiums.
• The terminal illness benefit pays out the full sum insured upon diagnosis, providing financial support when it's needed most.
• You can add accidental death benefit coverage and critical illness coverage for 34 listed conditions, with immediate payout on diagnosis. However, the critical illness benefit is paid from the base cover (accelerated payout).
• The waiver of premium applies only in case of permanent disability due to an accident, which limits flexibility in some health-related situations.

The plan does not offer inflation-linked top-ups or a separate payout for total permanent disability, but it still delivers strong value for those seeking straightforward protection with a few thoughtful add-ons.

3. Axis Max Life Insurance Smart Term Plan Plus: The Axis Max Life Smart Term Plan Plus is a flexible term insurance plan that offers seven different coverage options, catering to varied life needs.

• Among these, the “Regular (Level Cover)” and “Smart Cover” variants stand out, with the Smart Cover offering 1.5X coverage for the first 15 years—perfect for high-responsibility phases of life.
• The Regular option is straightforward and ideal for those seeking a no-frills term plan.
• It comes with essential add-ons, including an accidental death benefit, waiver of premium on disability or critical illness, and a critical illness rider that covers 64 specific diseases.
• The plan includes a zero-cost exit option, where you can receive a refund of your premiums if you exit within a predefined period.
• Women policyholders can benefit from added perks, such as Lifeline Plus, which adds extra value to the offering.
• However, the plan doesn’t allow you to increase your cover later or link it to inflation, which limits its adaptability over the long term.

Despite this, it remains a strong and customizable plan that works well for most individuals seeking flexibility and protection.

4. Bajaj Allianz Life eTouch II: Bajaj Allianz Life eTouch II is a well-balanced term insurance plan that offers affordability, strong claims performance, and valuable rider options.

• It includes a Zero Cost Option that allows you to exit the policy during a specific period and receive a refund of your premiums, adding flexibility.
• The plan offers a waiver of premium benefit for permanent disability due to accidents, as well as a life-stage benefit that allows you to increase your coverage after significant life events, such as marriage or childbirth.
• Its critical illness rider covers up to 60 conditions, provides a payout in addition to the base sum insured.
• Women and non-smokers get highly competitive pricing, making it especially attractive for those profiles.
• The insurer has a strong claims track record, with a 99.11% claim settlement ratio, a low complaint ratio of 4.4 per 10,000 claims, and a 93% amount settlement ratio—all figures that exceed the industry average.
• However, the plan does not offer inflation-linked cover increases or a lump sum payout for total and permanent disability, which may be a drawback for some.

Still, eTouch II remains a compelling choice for buyers looking for a reliable, feature-rich plan at a reasonable price point.

5. TATA AIA Sampoorna Raksha Promise: The TATA AIA Sampoorna Raksha Promise is a reliable and budget-friendly term insurance plan that offers comprehensive coverage, particularly for individuals with lower annual incomes.

• It features strong claim performance, with a 98.9% claim settlement ratio, a low complaints ratio of 3 per 10,000 claims, and a 92.7% amount settlement ratio.
• The plan includes valuable add-ons like critical illness cover, which pays a lump sum over and above the base cover if you're diagnosed with any of the 40 listed illnesses.
• It also offers accidental death and total permanent disability benefits, along with a waiver of premium if you become critically ill or permanently disabled.
• Built-in features like the life stage benefit let you increase your cover after significant life events, and the terminal illness benefit includes a partial payout.
• However, it lacks a zero-cost exit option and doesn’t allow automatic cover increases linked to inflation, which may limit long-term flexibility for some.

Despite these limitations, the plan stands out for its affordability, solid features, and dependable claim support, making it a strong contender in the term insurance space.

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Conclusion

Adding a Critical Illness Rider to your Term Insurance offers a robust layer of protection, ensuring that you're financially secure through thick and thin. By combining the affordability of term insurance with the comprehensive coverage of critical illness, you get a more holistic approach to safeguarding your future.

The additional benefit of critical illness coverage ensures that you don’t have to dip into savings or rely on other resources during your recovery period, making it an essential component for long-term financial security.

For those who want extensive protection at an affordable premium, this combination can be a game-changer. It provides peace of mind knowing that your family is financially protected in case of unexpected events, and you also have financial support if you face a serious health issue.

In conclusion, Term Insurance with Critical Illness Rider strikes the perfect balance between life coverage and health protection, making it a smart choice for those who want to secure their health and future.

FAQs on Term Insurance with Critical Illness Cover