Term Insurance with Critical Illness Riders

Benefits of term insurance with critical illness

Term insurance with critical illness cover offers many useful benefits. These include: 

• One-time payment with no deductions: If you are diagnosed with a listed critical illness, you receive a lump sum amount. This payout can be used for treatment, medicines, surgery, or any important expenses.
• Protection for medical costs: The lump sum payout can cover major medical expenses. You can use it for hospital bills, medicines, ambulance charges, lab tests, or doctor consultations.
• Support during income loss: A critical illness may lead to temporary income loss. The payout can help manage household expenses like groceries, utility bills, or children’s education. This ensures your family’s financial stability during recovery.
• Additional tax* benefits: Term insurance premiums qualify for tax* benefits under Section 80C and Section 10(10D) of the Income Tax Act, 1961. When you add a critical illness rider, you can also avail tax* benefits under Section 80D. Lower GST on term insurance premiums further makes plans with critical illness riders affordable while keeping tax* benefits intact.
• Premium amount remains the same: The premium remains fixed throughout the policy term even if a critical illness is diagnosed. If you have selected a waiver of premium benefit, future premiums may be waived after diagnosis as per policy terms.
• Better chances of survival: Many patients stop treatment due to high costs, which affects survival. With critical illness cover, you receive funds to continue proper treatment at good hospitals. This increases the chances of recovery and long-term survival.

Who should consider buying term insurance with critical illness coverage?

Critical illness riders can be appropriate for the following individuals:

• Those with a family history of critical illness: In case of a family history of cancer or heart disease, your risk may be higher. When you are young and healthy, you can buy term insurance with a critical illness rider for an affordable premium.
• Sole earning member: A critical illness could mean loss of earning capacity, apart from the high expenses of treatment, especially if you are the sole earning member of the family. The rider will help you take care of hospital expenses as well as family expenses so that your family stays financially secured.
• People above 40 years of age: It is often observed that lifestyle diseases appear after the age of 40. If diagnosed with a serious illness, individuals in this age group can secure their financial future.
• Those in high-pressure jobs: Having unhealthy habits and stress can lead to critical illnesses. It may not be possible to change a demanding job, but you can protect yourself financially by purchasing a term plan with critical illness cover.

Diseases covered by term insurance with critical illness rider

The number of diseases covered by a term life insurance with critical illness rider depends on the insurer. Common illnesses include:

• Myocardial Infraction

• Angioplasty

• Heart Valve Surgery

• Open Chest CABG

• Cancer of Specific Severity

• Major Head Trauma

• Blindness

• Organ/Bone Marrow Transplant

• Motor Neurone Disease with lasting symptoms

• Liver Failure (terminal stage)

• Aplastic Anaemia

• Poliomyelitis

• Permanent Limbs Paralysis

• Primary Pulmonary Hypertension

• Benign Brain Tumour

• Lung Failure (Terminal stage)

• Multiple Sclerosis with Persisting Symptoms

• Burns (Third-degree)

• Systematic Lupus Eryth with Renal involvement

• Deafness

• Loss of limbs

• Muscular Dystrophy

• Loss of Independent Existence

• Parkinson’s disease

Some insurers may cover 40+ or even 60+ illnesses depending on plan type.

What does a critical illness rider not cover?

A critical illness rider does not cover:

• Illnesses not listed in the policy

• Conditions diagnosed during the waiting period

• Illness caused by alcohol or drug abuse

• Sexually transmitted diseases

• Minor health conditions or early-stage diseases (unless stated)

• Self-inflicted injuries or suicide attempts

• Injuries from war, riots, or hazardous activities

• Pre-existing diseases (as per policy terms)

How does term insurance with critical illness rider work?

Here is how it works:

• You buy a term plan and add the critical illness rider.

• You pay an extra premium for the rider.

• If you are diagnosed with a covered illness, you file a claim.

• After verification, the insurer pays a lump sum amount.

• You can use the money for treatment or daily expenses.

• The life cover continues as per policy terms.

• In case of death, the nominee receives the death benefit from the term plan.

How to buy term insurance with critical illness coverage

You can purchase critical illness coverage by following these steps:

Step 1 - Select your coverage and duration 

Be sure the sum insured is adequate for your family before purchasing term insurance. For achieving sufficient financial security for their family, a young professional with a home loan and children may consider a 1 crore term insurance plan. It is essential to ensure that the term and sum of the insurance are right for the family's financial requirements.

Step 2 - Add a critical illness rider 

From the list of critical illness riders available for the plan, choose one that suits you.

Step 3 - View premium 

Once the rider has been added, check the term plan premium. The term insurance premium calculator can help you estimate your premium. Additional coverage is available under critical illness riders.

Step 4 - Pay premium

Finally, you will be directed to the payment gateway. The premium payment interval should be chosen in accordance with your needs. It may be monthly, quarterly, half-yearly, or yearly.

Once the payment has been received, the critical illness rider will be added to the life insurance policy.

Important points about term insurance with critical illness rider

There are a few important things you need to know about critical illness rider term insurance:

• If the policyholder dies during the policy term, the beneficiary receives the life cover payout.

• Under the critical illness rider, you can receive a lump sum payout upon diagnosis of a critical illness.

• A lump sum is released immediately on diagnosis of the illness since there is no minimum survival period.

• Each term plan covers different illnesses. Moreover, each plan has its own terms and conditions. 

• As the policyholder can afford quality treatment for the disease, the chances of survival increase.

• Before buying a plan, check the waiting and survival periods.

• Payments can be made in a lump sum or at regular intervals for a limited term or the whole policy term.

• Sections 80C and 80D of the Income Tax Act 1961 provide tax benefits.