When would I get the payment if I have a critical illness rider with a life insurance policy?
Critical illness rider provides a lump sum payment (as decided by you), irrespective of the cost of medical treatment. The benefit is provided on diagnosis of any of the critical illnesses covered by the insurer. I would advise you to read the product brochure to understand the exclusions. For example, insurers exclude claims under this rider within six months of the issue of policy. This is to discourage customers from applying for this benefit after suspicion/diagnosis of any of these diseases.
What happens if a life insurance policy is terminated before maturity?
What happens if your policy is terminated before maturity depends on the nature of the product you have bought. If you terminate a term plan by not paying a premium, your risk cover will cease. In traditional plans, if you stop paying premiums (after the grace period), your policy will either lapse or move to a paid-up status. In a lapsed state, the risk cover would cease and no benefits would be payable. In a paid-up state, the sum assured would reduce and the policy will cease to participate in future profits - new bonuses will not be added.
In unit-linked insurance plans, on discontinuance of your policy before the completion of the fifth policy year, your fund value less any applicable discontinuance charge will be moved to the "discontinued policy fund" and will earn minimum guaranteed returns as specified by the regulator. The fund value is payable to the policyholder after the completion of the fifth policy year. The risk cover will cease in the "discontinued policy fund" state.
The views expressed are of Amitabh Chaudhry, MD & CEO, HDFC Standard Life