A critical illness insurance rider — sometimes called a chronic illness rider — can be added to your life insurance policy to provide financial benefits while you’re still alive if you’re diagnosed with certain illnesses.
The illnesses covered under the rider often include heart attack, cancer, stroke, kidney failure, ALS, and other critical conditions that could limit your life expectancy and leave you with expensive medical bills.
The financial benefit is deducted from the death benefit of your life insurance policy, and is disbursed to you as a tax-free lump sum. When you die, your beneficiaries will receive the remainder of the death benefit.
Some life insurance companies add a critical illness rider to policies automatically, while others will allow you to add it at an additional cost.
You should consider adding a critical illness rider to your life insurance if you’d like to be able to pull cash from your policy’s death benefit while you’re still alive after being diagnosed with a serious illness.
What does a critical illness rider cover?
The rider can be activated if you’re diagnosed with a qualifying medical condition, which vary from policy to policy but often include:
Technically, you can use the money deducted from your death benefit however you want, but most people use these funds to cover medical bills, or to replace a lost income if you have to stop working due to your illness.
How does a critical illness rider work?
If you’re diagnosed with a covered critical illness, you’ll be eligible to deduct a payout from your death benefit while you’re still alive. The exact terms of the advance payout will be explained in the rider of your insurance policy.
You’ll be paid a predetermined portion of the death benefit of your life insurance policy — also known as the critical illness benefit — if you meet the criteria to exercise the rider.
After receiving a qualifying diagnosis, you’ll need to file a claim with your insurance company and provide the medical paperwork to prove you meet the necessary conditions to claim the rider.
Once approved, the insurer will send you a lump sum, tax-free payment in the form of a check for the benefit amount.
Is a critical illness rider worth it?
Adding a critical illness rider may not be worth it for everyone. Some policies include the rider at no extra cost, while others charge additional premiums. Keep in mind that the rider doesn’t provide you with an additional benefit, but only allows you to withdraw funds from your life insurance policy’s death benefit in case of an eligible critical illness.
Using the critical illness rider ultimately means there will be less money for you to leave to your beneficiaries. Speak with a licensed agent to ensure that your family’s financial needs will be met with the insurance policy and any riders that you choose.
Can you get life insurance if you already have a critical illness?
If you’ve already been diagnosed with a critical illness, you can still get life insurance coverage, although depending on the severity of your conditions your options might be limited to final expense insurance. This is a type of policy that is usually geared toward covering end-of-life expenses, like a funeral or medical bills, and doesn’t require a medical exam.
The complexity and type of condition you have will determine the type of insurance and rates you’ll be eligible for. Discussing your options with a licensed agent is the best way to determine what insurance coverage will meet your needs.
Who is eligible for a critical illness rider?
Most people are eligible to add a critical illness rider to their life insurance policies, but it really depends on the insurance company.
Not every insurer offers a critical illness rider, so if you’re considering one, make sure you share that with your licensed agent so they can find an insurance company who can offer it to you.
Are there exclusions in a critical illness rider?
If you have a pre-existing condition, you won’t be eligible to exercise the rider for that specific condition.
For example, if you have a history of breast cancer, you would still be eligible to add the rider to your policy, but would need a different qualifying event — like a stroke or heart attack — to take advantage of the rider. You wouldn’t be able to exercise the rider if you were diagnosed with breast cancer again.
However, having a family history of an illness won’t prevent you from adding the rider to your policy.
What types of policies offer a critical illness rider?
Some insurance companies will include a critical illness rider automatically in your policy, while others will allow you to add the rider for an additional fee. Talk with a licensed agent to learn more about the cost of adding the rider to your policy.
What’s the difference between critical illness insurance and a critical illness rider?
Critical illness insurance is a standalone policy that exists exclusively to provide financial assistance to you in case you’re diagnosed with a qualifying critical illness. The only way you’ll claim a benefit for this type of policy is if you’re diagnosed with a qualifying critical illness while the policy is active.
A critical illness rider provides the same function, but exists as an add-on to a life insurance policy. If you’re never diagnosed with a critical illness, your beneficiaries will still be able to receive the death benefit in full when you die.
It’s much cheaper to add a critical illness rider to a life insurance policy than to get a separate critical illness policy, but you must add the rider when you get the life insurance policy. You can’t add the rider to an existing policy.
What’s the difference between a critical illness rider and a long-term care rider?
A long-term care rider is similar to a critical illness rider in that it’s a policy add-on that can give you financial benefits from your life insurance while you’re still living.
To qualify for the long-term care rider benefit payout, you must be unable to independently perform two of the following six activities of daily living either temporarily or permanently: eating, bathing, getting dressed, walking or getting from one place to another, using the toilet, and maintaining bowel and bladder continence. 
Much like a critical illness rider, once you meet the criteria for a long-term care rider, you can submit a claim for a predetermined portion of the benefit payout.
What’s the difference between a critical illness rider and an accelerated death benefit rider?
A critical illness rider and an accelerated death benefit rider both allow you to claim a portion of the death benefit while you’re still living if you meet certain criteria. However, the circumstances needed to exercise each of these riders are different.
For the critical illness rider, you need to be diagnosed with a qualifying illness, but it doesn’t need to be terminal.
For the accelerated death benefit rider, you need to be diagnosed with a terminal illness and be given less than 12-24 months to live.
The specifics of these riders will vary between insurance companies and will be clearly outlined in your policy documents.
Best life insurance companies for a critical illness rider
Foresters Financial includes a critical illness rider by default with its term life insurance policy at no additional cost. It also allows you to use the rider for a wider-than-average array of health conditions.
Forester’s rider covers life-threatening cancers, stroke, myocardial infarction, ALS, advanced Alzheimer’s disease, renal failure, and major organ failure.
Transamerica offers a living benefits option that includes a critical illness rider at no additional cost. You may redeem up to 90% of the death benefit of your policy if you’re confirmed by a doctor to have suffered a heart attack, stroke, or cancer.
How to pick a critical or chronic illness rider
The biggest factor when you’re considering adding a critical or chronic illness rider is financial need.
For a critical illness rider, you need to be diagnosed with a qualifying illness, whereas for the chronic illness rider, you need to be unable to perform two of the six functions of daily living.
For different people, each of those scenarios would warrant a different financial need. If you would benefit from being able to withdraw cash from your insurance policy’s death benefit in either case, consider adding the respective rider.