Life Insurance Critical Illness Rider

Written by Jeff Root

A Critical Illness Rider is one of many add-on riders you can include in your life insurance policy.

This benefit means that you have access to some of your death benefit prior to passing away depending on life circumstances.

How Does the Critical Illness Rider Work?

The Critical Illness Rider allows you as the policyholder to collect a portion of your death benefit to cover the cost of medical expenses and other expenses if you are diagnosed with a critical illness.

If necessary, you can also use this portion of your death benefit to pay for long-term care.

This is a low cost benefit which, with permanent policies, is typically included free of charge. The amount of your death benefit your receive is contingent upon your company and it might be a flat percentage such as 50% of your total death benefit or it could be a figure equal to your base policy coverage.

Who is Eligible for the Critical Illness Rider? 

In order to utilize the Critical Illness Rider, there are many conditions and limitations.


Typically these limitations includes an age range. Life insurance companies will add a maximum age between 65 and 70 depending on the company.

Coverage starts with a diagnosis. Some insurance companies state that you have to survive for at least 30 days after the original diagnosis in order to collect this benefit.

Others will not pay the benefit until you have lived at least 90 days after the initial diagnosis.  That said, the value associated with his benefit exceeds a monetary one. It can simply help you and your loved ones when you faced a difficult time.

Qualifying Illnesses

Eligibility extends to the definition of critical illness which differs from one company to the next. Generally speaking, insurance companies consider the following to be critical illnesses:

  • Major organ transplant
  • Cancer
  • Heart attack
  • Stroke

Even within these health conditions, there are stipulations which life insurance companies use to classify who is eligible to receive the death benefits from their policy under the critical illness rider.

Cancer, for example, is typically defined by the severity of cancer and the type of cancer. You cannot just take out this benefit for less serious cases of cancer like skin cancer.


This does seem slightly cold-hearted but you have to understand that the differences reflect survival rates. The entire purpose of a critical illness benefit is to help you only when the condition you have shortens your life span.

For example, the survival rate for prostate cancer is 99% but the survival for pancreatic cancer is only 10%. It is easy to see how companies would allow one of these to fall under the critical illness definition and not the other. Likewise, coverage for stroke varies based on symptoms. Stroke and heart attacks have to carry with them permanent symptoms in order to qualify for critical illness.

Who is the Critical Illness Rider Best for?

This coverage is ideal for anyone who wants protection against the unexpected financial burden of a critical illness.

Even if you are in good health right now and you received a decent life insurance policy, you might know that many of your family members suffered from pancreatic cancer or heart conditions. If you think that your family has an increase risk or your job puts you at a higher risk, or your current health places you at a higher risk, this is something you should absolutely invest in.

Pros and Cons of the Critical Illness Rider


1. Extra Financial Support in the Event of a Critical Illness Diagnosis

The main benefit to this feature is the extra security at provides especially if you are worried about being unable to support your family in the event that you are diagnosed with a critical illness.



1. Strict Guidelines for Which Illnesses Qualify 

The drawbacks though include the fine print for definitions of critical illness. Many companies will have exclusions and if you fall under any of those exclusions they will not pay for a claim. For example, if your health issue is the result of a pre-existing condition it does not fall under protection from your critical illness benefit.

So, if you have a pre-existing heart condition and the company is aware of it, you were aware of it, and you are issued a diagnosis that states you have a critical illness because of that pre-existing heart condition, you cannot use the benefit to cash out part of your death benefit prematurely.

2. Some People May Be Denied This Coverage Because of Lifestyle

Other exclusions might include lifestyle factors. If you decided to go skydiving and you received a critical illness diagnosis as a result, the Life Insurance company may not cover that.

Some companies also exclude things outside of your control like terrorism or military activity during peacetime, so even military members who receive a critical illness during peacetime are not covered.

Things to Keep in Mind with the Critical Illness Rider

You need to be aware that the amount of death benefit you can take out is going to be based on a number of things such as your diagnosis and your life expectancy.

Each life insurance company has a formula to determine how much you are allowed to get prematurely. Usually, it is a percentage ranging between 40% of your death benefit and 70%.

If you have a policy that allows you to receive 100% of your death benefit early in the event of a critical illness, be advised that should you choose to take the entire death benefit your policy is terminated upon receipt.

If you have this feature on your policy and you never need it, then your policy continues to function as any other life insurance policy and when you pass away your beneficiaries receive the full death benefit. In the event that you did have to take out a percentage of your death benefit, whatever is left over will still be given to your beneficiaries when you pass away.

How Much Does the Critical Illness Rider Cost?

The cost of the Critical Illness Rider is typically a few dollars for every unit of coverage you have, a unit being $1,000.

This cost varies from one company to the next and it also varies based on the type of policy you have. If you have a permanent policy the cost might already be factored into your policy as one of the extra features.

Best Life Insurance Companies

Company A.M. Best Rating
Protective A+
Banner A+
Prudential A+
Lincoln Financial A+
North American A+
Phoenix Life B
Principal A+
American National A
Ameritas (FLX Living Benefits Products) A+
Sagicor A-
Assurity A-
Americo A
John Hancock A+
About Best Life Insurance Companies
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