A term insurance plan helps the policyholder provide for their family even in their absence. However, there are other unfortunate events besides the passing away of the policyholder that require immediate and immense financial help. One such event is the diagnosis of a critical, life-threatening illness. The treatment for such a disease can be very financially demanding. Therefore, when you buy term insurance, you should highly consider opting for the critical illness benefit rider. Though the premium may increase by a bit, it may prove to be a boon when critical illnesses strike.
How does term insurance with a critical illness rider work?
The critical illness rider covers a variety of serious illnesses, events, and medical procedures such as cancer, heart attack, open chest CABG, kidney failure, major organ transplants, strokes, multiple sclerosis, Alzheimer’s disease, and so on. The coverage may be dependent on the kinds, stages, and severity of the medical illness/event/procedure.
When you are diagnosed with a covered illness, you can reach out to your insurer, submit the required documents, and make a claim. Once your claim is approved, you receive financial compensation as agreed upon in the policy. Since you are receiving more coverage, the term premium may increase a bit. You can use a term insurance premium calculator to get an idea of how much the increase could be.
Reasons to opt for the critical illness rider
- Increase in the number of life-threatening diseases
Whether you may want to blame it on the sedentary lifestyles, the stressful nature of our work hours, rising pollution levels, or on the adulteration of food items, there is no denying that the number of life-threatening illnesses has increased in the last few years. According to the Indian Council of Medical Research, cancer cases in India are going to see a rise of 12% in the next five years. Having a critical illness rider is now more important than ever.
- High medical expenditure
As many may be aware, the costs of getting a critical illness treated are exorbitantly high. Some patients may even want to seek treatment abroad to access better facilities. Handling such high costs and charges is bound to deplete your life savings, leading to financial issues for your family members. Therefore, when you buy term insurance, do give considerable thought to the critical illness rider.
- Regular health insurance policy may not be enough
Many do not opt for the critical illness rider thinking that their regular health policy may be enough for them in such situations. However, the nature of critical illness treatment is such that you may have to make frequent claims for large amounts on your health plan. Thus, the sum insured may be exhausted easily. Instead, buying term insurance with a critical illness rider can be the right option. Not only are you assuring your life but are also receiving coverage for multiple critical illnesses.
- Tax benefits
According to Section 80D of the Income Tax Act, the premiums you pay towards critical illness insurance are eligible for tax deductions. This deduction is subject to changes in tax laws. This, in addition to the Section 80C tax deductions applicable on term insurance premiums, makes this policy-rider combination a financially wise choice.
- Income replacement
The diagnosis of the main earning member of the family with a critical illness means that they will be unable to work. It is important that they focus on rest and recovery. Unfortunately, this also means that the family may be bereft of a regular income for the duration of the treatment. This can be avoided by purchasing term insurance with a critical illness rider. The payout received can act as an income replacement, thus ensuring that the family’s daily expenses run smoothly.
If you are susceptible to a critical illness due to genetic reasons, then this rider is a must. You can research the costs associated with the treatment of the illness. Then, you can use the term insurance premium calculator to get an idea of the premium you will be incurring in order to receive the payout you would require.