Why Critical Illness Cover is Important in the Basic Term Insurance Plan?

Life can be ungrateful sometimes. You may find yourself dealing with a critical illness at any stage of your life, and it eventually becomes difficult to cover the high medical expenses. Moreover, if you are the sole earner, this may lead to a huge financial burden on your family.

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    They not only struggle to meet the cost of treatment but also with the loss of income. So to cover it up, they have to dig into the savings that you might have done for your child’s future or your retirement.


    To financially safeguard yourself against critical illnesses, it is recommended you to go for a term insurance plan that gives a critical illness benefit. The person buying the insurance policy also gets a variety of options to get enhanced protection.

    The purpose of a critical illness cover is to pay for expensive treatments.

    Term insurance is a simple and most cost-effective insurance policy. It is created in a way that the policyholder dies the family gets the sum assured according to the plan.

    In term insurance plan, the person who has purchased the policy has to pay a certain amount as premium once every year, depending upon the plan chosen. As a result of which a particular amount that is also known as the death benefit, is given to the nominee if the policyholder dies during the tenure of the policy.

    Many term plans protect the policyholder in the form of cash payouts on the diagnosis of major illnesses like cancer, or heart attack or organ failure.

    Term plans with critical illness benefit give a lump sum amount in case of any one of the illnesses included in the insurance policy.

    This may include heart attack, cancer, paralysis, heart failure, lung diseases, major surgery of the aorta, repair of heart valves, open-chest CABG, end-stage lung disease, third-degree burns, end-stage liver disease, major head trauma, loss of limbs, benign brain tumor, among many others.

    A term insurance plan with critical illness benefit covers both hospitalization and non-hospitalization expenditure (like the recovery period). You can also opt for a higher health insurance cover as it gives a much wider coverage.

    For the treatment of such critical illnesses, you may have to make multiple visits to the hospital over a long period, which means it is an extra addition to the hospitalization cost.

    A critical illness plan provides a lump sum amount that can be used to pay off these high expenses. An amazing thing about this plan is that the lump sum amount that you will receive will be in addition to any medi-claim or health insurance policy that you may have already purchased.

    Although a critical illness plan can be purchased as a standalone policy, it is often clubbed with life or health insurance plans. You can choose any one of them depending upon what you need. The terms and conditions are often the same.

    A standalone policy gives you more flexibility in choosing the sum insured and offers larger covers than the riders. However, a standalone policy costs more as it gives you the liberty to choose a higher sum insured.

    However, people usually go for a term insurance plan coupled with a critical illness plan as it provides numerous other benefits. Given below are the reasons for buying a term insurance plan with critical illness benefit.

    Premium Amount Doesn’t Change

    Once you have opted for term insurance along with critical illness benefit, the insurance premium amount to be paid will remain the same during the entire tenure of the policy. So, if you are diagnosed with a critical illness, the premium amount will not increase. Moreover, insurance firms would forgo any future premiums upon critical illness diagnosis.

    Tax Concessions

    The premiums that you pay for your term insurance policy get tax benefits under Section 80C of the Income Tax Act, 1961. The premium amount of up to Rs 1.5 lakh is deductible from your taxable income. Moreover, the benefits that you get under this plan exempted under section 10(10D) of the Income Tax Act, 1961.

    Covering Medical Expenses

    Health care costs in India have seen a steep rise in the past few years. With ever-increasing medical expenses, it becomes all the more necessary to have an adequate insurance cover in a bid to avoid burning a hole in the pocket. If you opt for a critical illness plan with your insurance policy, it will help in hugely covering all the medical expenses. Moreover, the lump sum amount assured by the insurer can be used to cover daily expenses as well.

    Chances of Survival Increase

    If you fall gravely ill and you don’t have any insurance policy, high treatment costs may add to your financial burden. It often happens that people with critical illnesses are compelled to give up treatment due to lack of money. As a result, their chances of survival become dim. But if you have a critical illness policy, you will get timely funds and can complete your treatment.

    However, before opting for a critical illness plan, keep the following points in mind.

    What Kind of illnesses is Covered?

    First and foremost, you have to check the list of critical illnesses covered in the plan. If there is a family history of the cardiac problem or any other big illness, make sure they are covered under the plan you choose.

    The Right Amount of Sum Insured

    While deciding which insurance cover to go for, evaluate the average cost of treatment of major illnesses. Do not forget to consider inflation.

    Transparent Claim Process

    Make sure that the critical care processes claim in a transparent. You should be aware of the exclusions and claim process.

    Summing it Up

    A critical illness policy has a lot more advantages than you might know. These plans can help you and your loved ones to overcome financial adversities at the time of medical emergencies.

    Written By: PolicyBazaar - Updated: 29 July 2021
    Disclaimer: Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by an insurer.

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