5 Reasons Why Term Plans Need A Critical Illness Cover

A serious illness can completely change a person’s life. In addition to the burden of treatment and recovery, there is also the worry of high medical costs, everyday expenses, and loss of income. Critical illness cover is a type of cover that provides the insured with a lump sum benefit upon diagnosis of a condition specified in the contract.

This type of insurance policy may be obtained separately or added to an eligible term insurance as a rider. When the policy conditions are met, that is, the insured is diagnosed with an illness stated in the policy; the insurance company covers part or all the costs.

The coverage provided depends on the insurance company and the policy selected, so it is important to carefully study the list of diseases, waiting period, survival period, and other features before buying.

Term insurance offers financial protection to a policyholder's family in case of death during the policy term. A critical illness rider term plan can help. Explaining why term plans need a critical illness cover can help understand the benefits of the additional cover. The rider can help bear the medical expenses, household expenses, and/or loan EMIs to ease the financial burden. Having a term plan with critical illness benefit can go hand in hand with your health insurance, subject to the terms and conditions.

To make up for the Loss of Income

When the sole earning member of the family is diagnosed with a serious illness, prohibiting him or her from working and continuing to earn, the strain on the patient and the family members is intense. As the policyholder and the provider of the family, it is wise for you to provide for this contingency. Your family doesn’t need to scramble to make sure they can afford your treatment while taking care of household expenses. The critical illness cover will act as an income replacement, buying your loved ones time to get things in order while you focus on getting better.

Tax* concessions of the critical illness cover

As a bonus, when you couple your term plan with a critical illness cover, you get additional tax benefits. The term plan is covered under Section 80C of the Income Tax Act, 1961, while the critical illness cover is exempted under Section 80D of the act. The proceeds from these aspects of your term policy are exempted under Section 10(10D). You get the benefit of saving taxes on two counts.

Covering exorbitant medical expenses

With healthcare costs on the rise in India, any illness results in the patient and their family incurring large medical bills. From hospitalisation to expensive tests and medication, the expenses are endless. If you opt for the critical illness cover with your term plan, the lump sum amount will go a long way in covering your medical bills. Sometimes, mediclaim does not guarantee¹ that you can avail of cashless claims. The lump-sum payment on diagnosis saves you and your loved ones the worry of collecting funds for your treatment.

Focus on Recovery

When you do not have to worry about your medical bills and the loss of income, you can focus all your energy on recovering. You can get the best care needed, be it physiotherapy or rehabilitation programmes that aid your recovery, and you can work towards getting physically stronger without the worry of any financial liabilities looming over your head. In cases where people do not have access to funds for medical expenses, they are forced to borrow or take on debts. Many times, people have to abandon treatment altogether as they can’t afford it. You can avoid these circumstances by opting for a critical illness cover along with your term plan.

The premium stays the same

When you opt for the critical illness cover benefits with your term plan, the insurance premium amount that you pay will remain the same during the entire period. If you are diagnosed with a critical illness during the policy tenure, your premium will not increase, as this has already been factored in during premium calculation.