What is Terminal Illness Rider Benefit in Term Insurance?

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Health

If you are diagnosed with any terminal illness, it can significantly impact your physical and emotional health. Regular visits to the hospital, diagnostic tests, surgeries can take a toll on your family too. Not to mention, the treatment for such illnesses can put immense strain on your finances.

Even if you have sufficient life insurance coverage to protect your family’s financial future, terminal illness can exhaust your savings in one go. Hence, to avoid this situation, more and more people are now buying terminal illness riders with term insurance plans to meet the treatment expenses.

What is a terminal illness rider?

As the name suggests, terminal illness rider is an add-on coverage that you can purchase with a term insurance policy to get additional cover apart from the death benefit. With terminal insurance, you get a tax-free lump sum amount when you are diagnosed with any of the listed terminal illnesses covered under the policy. You can use the amount for treatment expenses, including hospital bills, tests, speciality doctor consultation fees, ambulance charges, etc.

Since the treatment for terminal illness can be expensive, the rider can come in handy to meet the high cost without digging into your hard-earned savings. The rider also allows you to get the best healthcare services without worrying about hefty bills and finances.

Benefits of buying terminal illness rider

  • Serves as an income replacement

When you are diagnosed with a terminal illness, the recovery process can be long, and you may need to be hospitalised for a prolonged period. In such a situation, you and your family may suffer financial hassles due to loss of income.

However, if you have a terminal illness rider, the insurer will immediately pay the full coverage amount in lump sum. Your family can use the amount to meet the treatment expenses and take care of their everyday needs.

  • Protection against critical medical condition

Some studies suggest that terminal illness accounts for about 60% of the total deaths in India. If you have a standard term insurance policy without a terminal illness rider, your family may not get the policy benefits in the event of your demise due to such illnesses.

Hence, it is advisable to get this rider, especially if you have a family history of a terminal disease. You can take this rider as additional cover along with your existing term plan. The rider can provide your family with the much-needed financial cushion during a medical emergency.

  • You can enjoy double tax benefits

Apart from getting monetary compensation, a terminal illness rider allows you to enjoy dual tax benefits. The premium you pay for the regular term insurance policy is eligible for deduction under Section 80C of the Income Tax Act up to  ₹ 1,50,000. Also, with this rider, you can get an additional deduction of up to ₹25,000 in a financial year under Section 80D of the IT Act.

  • Higher coverage at an affordable premium

Unlike the standard health insurance plans that have different premium rates after a specific period, a term insurance policy with a terminal illness rider allows you to get higher coverage at the most affordable premium rates.

It is better to take a terminal illness rider with term insurance instead of medical insurance, if your family has a history of a terminal illness. The rider can help you get financial assistance if any unexpected event occurs in the family.