I wanted to take a critical illness (CI) rider with a sum assured of Rs 10 lakh along with a term insurance policy of Rs 30 lakh. But my insurance agent says that since the premium of the CI rider can’t be more than 30 per cent of the basic cover premium, the sum assured of my CI rider can’t be more than Rs 5 lakh. Is there such a rule?Yes, the IRDA (Protection of Policyholders’ Interests) Regulations, 2002, has put a cap on the maximum amount of a critical illness rider benefit. It stipulates that the additional premium that can be charged for a rider (optional extra benefits) cannot exceed 30 per cent of the premium charged on the main product.
The main idea behind this rule is to stop insurance companies from selling policies with very small death benefits and huge rider benefits. The premium for a rider is generally higher than what it would be if an individual opts for a separate policy. The idea of taking an additional rider is to save costs for a customer to include several covers, such as critical illness and hospital cash benefit, within a basic life insurance policy rather than setting them up as standalone products with their own separate administrative charges. However, it restricts the scope of an additional rider benefit.
