LIC’s New Critical Illness Benefit Rider
Most people prefer investing in a term plan as it is a simple and cost-effective insurance policy. The policyholder pays the premium and is insured. If the policyholder dies the appointed nominee receives a lump sum amount called the death benefit. Some insurance plans also pay out a maturity benefit. Anyone who buys a policy wants to ensure that in difficult times the policy is able to provide some financial aid. To fulfil this aim the best alternative is to invest in an add-on Rider along with the basic insurance plan.
What is the need for a Critical Illness Benefit Rider?
These days the medical treatments costs are sky high. Falling unwell is not only physically and mentally traumatising but also makes a big hole in the pocket. According to a recent study, Cancer deaths make almost 8% of totals death in India in 2016. The medicines and the treatment that is required are not within the reach for most of the patients. To be able to afford these mounting costs, it becomes imperative to invest in a Critical Illness Benefit Rider. An insurance policy that comes with a Critical Illness Benefit covers the hospital as well as non-hospital bills. It helps the policyholder and the family members by providing the much-required cash flow. One such Rider is LIC’s New Critical Illness Benefit Rider.
LIC’s New Critical Illness Benefit Rider
LIC’s New Critical Illness Benefit Rider is a non-linked rider that helps the grief-stricken family bear the medical expenses of the policyholder. By paying a little extra amount the policyholder can purchase this rider with any vanilla LIC term insurance policy. However, it should be noted that LIC’s New Critical Illness Benefit Rider can be attached only with the non-linked plans, that too only at the time of commencement of the base policy. In case of the policyholder’s death, the beneficiary will receive the death benefit as well as the sum assured under the rider. LIC’s New Critical Illness Benefit Rider is an add-on and continues till the time the insurance policy continues, it does not exist in isolation.
Critical Illnesses Covered under LIC’s New Critical Illness Benefit Rider
In case the following 15 critical illnesses are diagnosed in the policyholder, the sum assured under the Critical Illness rider is paid to the policyholder. The rider is payable once during the tenure of the policy. The illnesses that are covered under LIC’s New Critical Illness Benefit Rider are:
- Cancer of Defined Severity
- Benign brain tumour
- Permanent paralysis of limbs
- Alzheimer’s disease/Dementia
- A major organ or bone transplant
- Open heart replacement/Repair of Heart Valves
- Multiple sclerosis with persisting symptoms
- Open chest CABG
- Kidney failure
- Third-an degree burns
- Primary pulmonary hypertension
- Aortic surgery
- Myocardial infarction
Exclusions of LIC’s New Critical Illness Benefit Rider
Even if the policyholder is diagnosed with the listed illnesses the benefit may be denied in case the illness has been caused, either directly or indirectly, because of the following situations:
- Death of the insured occurs within 30 days of the diagnosis of the illness
- The critical illness is diagnosed within the 90 days waiting period
- There have been self-inflicted harm, an attempt of suicide acts out of insanity, lawbreaking acts
- Being HIV Positive
- In the state of civil instability, war, riots etc.
- An inborn condition or a condition that has been there since birth
- Pre-existing medical conditions
- Nuclear Radiation or Waste Exposure
- If there is a failure in seeking medical advice that a sensible person would undergo as suggested by a Medical Practitioner.
Other Important Features of LIC’s New Critical Illness Benefit Rider
Here are some important aspects of LIC’s New Critical Illness Benefit Rider
There is a waiting period of 90 days that is applied from the commencement of risk or the date of revival of the policy and the rider, whichever is later, to the time when the illness is diagnosed. This means that the benefit can be availed if the illness is recognised only after 90 days of buying the policy.
There is a survival period that is relevant from the date of the illness diagnosis to 30 days. If the death of the policyholder occurs during this period then there would be no payable benefit. In simple words, in order to claim the rider benefit, the policyholder must outlive the first 30 days that start from the date of the diagnosis.
There is no surrender value in LIC’s New Critical Illness Benefit Rider, simply because there is no paid-up value. If in case the basic policy is being surrendered, and all the premiums have been regular and timely paid, then in certain situations partial refund might be available.
A grace period is given to the policyholders to clear their dues without being penalised. Failure to do so will result in policy lapse. Depending on the frequency of premium payment a grace period of 15/30 days is given.
LIC’s New Critical Illness Benefit Rider will cease to exist once:
- The claim amount is paid to the policyholder
- The rider reaches its date of expiry
- The base policy is cancelled
- The base policy becomes a paid-up policy
- The critical illness is diagnosed with the waiting period
The premiums that are paid towards LIC’s New Critical Illness Benefit Rider are tax exempted under Section 80D of the Income Tax Act.
A 15-day free look period is given to a new policyholder, so that if in case he is not fully satisfied with his policy, he can return it by stating the reason for objection.