In a growing trend, insurance companies have begun appending critical illness (CI) riders as part of traditional life insurance policies. Insureds can accelerate receipt of a share of their policy if they are diagnosed with a critical illness such as heart attack, stroke, or cancer.
Proceeds from the rider are paid directly to an insured, with no restrictions on how the funds are spent, noted Darrell Spell, principal and consulting actuary for Milliman.
“The remainder becomes payable upon death, so if you accelerate 50% of your $100,000 face-amount term life policy, your beneficiaries would receive the remaining $50,000 upon the insured’s death,” Spell said.
Similar to stand-alone CI products, insureds can use the riders’ benefits for virtually anything–mortgage, credit card bills, travel expenses, experimental drugs, child care. “The choice is theirs,” Spell said.