The Difference Between Chronic and Critical Illness Life Insurance Riders

Wanting to know the difference between chronic and critical illness life insurance riders? We’ll show you everything you need to know.

Life insurance policies protect the policyholder’s family from unexpected expenses after they pass away. While it’s a great security measure for many families, life insurance policies fail to help with expenses while the policyholder is still living. 

For those suffering from a chronic or critical medical condition, it can be difficult to juggle medical expenses and daily activities. For sufferers of chronic and critical illnesses, there are riders for most life insurance policies that can help with expenses before death. In addition, these policies can help with sudden medical bills if regular health insurance doesn’t cover enough. 

What are Life Insurance Riders? 

Life insurance riders offer extra payment to policyholders who qualify for benefits other than their regular insurance policies. These can include long-term care riders, chronic illness riders and critical illness riders. Chronic and critical insurance riders provide extra protection for the policyholder and their families in the event of an unexpected illness or injury. 

A chronic illness life insurance rider, also known as an accelerated death benefit rider, refers to an option for life insurance where policyholders can begin using their benefits while still living. This policy is for people who’ve been diagnosed with a chronic or terminal condition that require long-term care. 

The money set aside in a chronic illness rider helps the policyholder pay for periodic medical expenses or long-term care facility payments. Qualifying chronic conditions may vary depending on the insurance company.

A critical illness life insurance rider allows a policyholder to accelerate partial payment of their life insurance benefits due to a diagnosis or worsening of a critical health condition. 

While normal life insurance policies only grant benefits posthumously to beneficiaries, this rider allows the policyholder and their beneficiaries the option to receive partial payments or a lump sum to help cover certain medical expenses or funeral costs. Qualifying critical illnesses may vary depending on the insurance company. 

Chronic Illness Life Insurance Riders

The main difference between a chronic illness rider and a critical illness rider can vary person-to-person based on their medical situation. Examples of chronic illnesses may include cancer, diabetes, COPD or dementia. 

While many chronic illnesses can be terminal, some can be controlled and managed through medication and therapy. Even if a policyholder isn’t terminal, they may still qualify for the chronic illness rider. Benefits reward upon diagnosis from a licensed physician and are dependent on the circumstances of the diagnosis.

Medication, therapy and long-term care can be expensive for anyone. While many senior citizens qualify for Medicare and Medicaid to cover medical costs, having an added layer of protection can help policyholders and their families save money while getting adequate medical care. 

Chronic illness riders are also great for younger people with chronic conditions since they may not qualify for Medicaid and Medicare. Policy benefits pay for things not related to medical expenses such as rent, transportation and groceries. This is especially helpful for younger people who may not have access to full-time caretakers. 

Critical Illness Life Insurance Riders

The critical illness life insurance rider helps policyholders with terminal medical issues that will lead to death. This may include terminal cancer, advanced-stage Alzheimer’s, heart disease or stroke. 

The benefits of this policy distribute in any way the policyholder chooses even if they don’t directly pay for medical expenses. Insurance benefits can go towards paying rent, groceries, utilities etc. 

This rider is typically a subset to a chronic life insurance rider as a way to handle more severe medical cases and give even more accelerated benefits. Critical life insurance riders take a percentage of benefits that are part of your life insurance policy to accelerate payments. 

Depending on the situation, that percentage can range from 40 to 80 percent and is usually received in a lump sum. 

Policyholders also have the option to use their policy traditionally and benefits go to beneficiaries after death. This option can work well if medical costs aren’t going to break the bank and the family of the policyholder will receive more benefits. 

Eligibility and Restrictions

When applying for a life insurance rider for accelerated benefits, there are certain eligibility requirements and restrictions. Insurance companies have to verify the policyholder’s medical history with their physician to determine eligibility.

Benefits will usually kick in after a diagnosis and the percentage of accelerated benefits can be decided between the insurance company and the policyholder. 

While different insurance companies have different definitions of chronic and critical illnesses, most companies will accept the following conditions. 

  • Parkinson’s. 
  • Alzheimer’s and dementia.
  • Certain autoimmune disorders.
  • Certain cancers. 
  • Stroke or paralysis.
  • Loss of limbs or organ transplants.
  • Crohn’s disease. 

Of course, every situation will vary based on the severity of the policyholder’s condition and the likelihood of long-term survival. Many insurance companies also have an age cap on certain accelerated benefit riders. For example, seniors over the age of 85 typically have a different type of insurance plan than younger policyholders. 

With any insurance policy, there are exclusions. For example, certain cancers such as breast or prostate cancer may not be covered. This is because of high survival rates. 

Treatable chronic conditions like Diabetes or other autoimmune disorders may not be covered unless the symptoms have become debilitating. Other illnesses typically not covered under these riders are Sickle Cell Anemia, Addison’s disease, Fibromyalgia and benign tumors. 

In addition, any illness or injury that is self-inflicted or occurs during active military service, combat, riots or protests typically isn’t covered by most insurance companies. 

Downsides to Life Insurance Riders

While both chronic and critical insurance riders can provide added security, they also have downsides. The main issue with chronic and critical illness riders is limited eligibility.

With so many restrictions, it can be frustrating for people who just want to ensure protection for themselves and beneficiaries. This can be especially difficult for younger people suffering from a chronic illness. Medical expenses can add up quickly without proper insurance options. 

Another downside to riders is finding the balance between accelerated benefits and regular life insurance benefits. As stated before, policyholders can choose between using accelerated benefits. Or, waiting until they pass away to save 100 percent of their funds to family members.

Various factors can play into this decision including the cost of medical care, a timeline of treatment, health insurance coverage and general financial responsibilities. Policyholders also have to watch out for how much money is taken out of the life insurance policy for accelerated benefits. This will reduce the amount granted to beneficiaries after their death. 

This can affect funeral costs and medical bills that will have to be paid by beneficiaries. See this article on the pros and cons of cashing in your life insurance policy for more information. 

Overall Differences

Chronic and critical life insurance riders both offer an added layer of security for policyholders. And also for their families in the event of certain illnesses. They both offer accelerated benefits to policyholders while they’re still living. This makes it easier to cover medical expenses and general financial responsibilities. However, there are some differences.

Chronic illness riders typically award benefits periodically and usually kick in after a diagnosis of a qualifying condition. Or, after the policyholder is unable to perform two of six tasks: eating, bathing, using the restroom, dressing, transferring and continence. Chronic illness riders may also have a wider variety of qualifying conditions compared to a critical illness rider.

Critical illness riders are usually paid in a lump sum upon diagnosis of a qualifying condition. Policyholders are usually rewarded between 40 and 80 percent of their benefits. 

Policyholders can also choose to save their benefits exclusively for beneficiaries after their death. Critical illness riders work well for more severe conditions and unexpected medical issues like strokes or loss of limbs. 


Choosing the right life insurance policy can be overwhelming and confusing. Deciding whether or not to include a rider to a life insurance policy will depend on many factors. It will vary based on the insurance company. 

With chronic and critical illness riders, policyholders can relax knowing that they have options. This can be for paying off long-term care costs, hospital bills and other medical expenses. These riders can also provide families with peace of mind knowing they will still receive benefits. This is even after the death of the policyholder. 

If you or a loved one are interested in adding a rider to an existing life insurance policy, NextGen Life Insurance is here to help. Contact us today for a free quote or contact one of our experienced agents for more information. We will be happy to answer any questions about your new or existing life insurance policies and riders.