A Critical Illness Rider is a type of accelerated death benefit rider which pays out benefits while the policyholder is still alive in the event of a critical illness diagnosis. A Critical Illness Rider will define specific conditions that qualify as a critical illness. Commonly covered diagnoses include stroke, kidney failure, ALS, and certain types of cancer.
The accelerated payouts from a Critical Illness Rider can be used at the policyholder’s discretion, and these benefits go toward medical costs or basic living expenses. Accelerated payouts are taken from the value of the policy’s death benefit, and the remaining value is disbursed as a lump sum to the beneficiaries if the policyholder passes away. Note: A Critical Illness Rider gives the insured individual the choice to accelerate their benefits in the event of a serious illness. If the insured opts not to collect early benefits, they can maintain their traditional benefit for the policy beneficiaries.
