Why Critical Illness is needed with Your Basic Term Plan

Term insurance plans are perhaps the most sought after life insurance products these days. Not only consumers, financial experts are always in favor of term insurance plans over any other insurance products. A term plan is better than other life insurance products because they offer higher sum assured amount at very low premium rates. Though term insurance plan are quite popular, a large fraction of people hardly know about the different riders available with it. Riders are important to consider while buying term insurance plans. Riders offer an enhanced insurance protection. But, the question that often comes to the consumers’ minds while buying an insurance plan is- which riders should one buy?

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Though it largely depends on the requisites of the insurance seekers, nonetheless, industry barons and insurance experts often suggest that policyholders must have Critical illness riders with a term insurance policy.  

While zeroing in on the term insurance plan, one must consider the aspect that why, as a buyer, they should go for a term plan that offers benefits as riders. To give you an apt answer, we have discussed this briefly, further in our article.

Riders strengthen the protection offered by a term insurance policy by offering multiple benefits apart from a core offering of the death benefit. However, the costs and conditions of riders vary from policy to policy. While some riders are inbuilt in term insurance plans, other riders need to be purchased separately by paying extra premium along with the basic premium.

Although all the riders have its own importance in some or the other ways, critical illness rider is a must which should be considered while buying a term insurance policy. Critical illness can dry out a person’s finance in the most freakish way, so it is best to have term plan with critical illness benefit.

The Major Reasons Why you must have a Critical Illness Rider with your Basic Term Plan are:-

  • The critical illness rider acts as an income replacement.
  • If you want to opt for a critical illness, then the insured does not need to think about spending extra cents as the premium stays the same.
  • Along with this rider, you can avail double tax benefit.
  • The critical illness rider provides you add-on coverage that can take care of medical and day to day expenses.
  • The critical illness cover provides coverage for all the major diseases like-
    • Heart Attack
    • Cancer
    • Paralysis
    • Coronary Artery Bypass Surgery
    • Major Organ Transplant (Heart, Kidney, Pancreas)
    • Stroke
    • Kidney Failure

How Critical Illness Rider Works

Under critical illness rider, the insured receives a lump-sum on the diagnosis of critical illness pre-specified in the policy. According to the policy terms and conditions detection of critical illness may either continue or terminate. According to the amount paid by the policyholder, the policy coverage becomes less. However, nowadays many insurance companies are coming up with innovative critical illness rider which includes lifestyle disease as well. It is always advisable to check the coverage carefully prior choosing the rider.

Apart from this the insured can also take benefit of hospitalization and non-hospitalization expenses that are both covered by your term plan that comes with a critical illness benefit. Moreover, the insurer may also provide much-needed cash flow during the recovery period. In case, the insured is diagnosed with any critical illness that is covered by the insurance company then he/she can get a tax-free lump sum in one go that should be used to pay off your mortgage, depth or any other liability the insured person may have.

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What are the Points that should be Kept in Mind While Going for a Critical Illness Cover:-

  • If the maximum tenure of the term plan is 30 years, then the coverage continues even after claiming benefit on selected critical illness.
  • The insured can save on taxes under section 80 C and 80D of income tax act.
  • Under the category of critical illness rider, the insured can get full benefit amount for critical illness cover.
  • The benefit amount payable is equal to the critical illness cover that the policyholder has chosen.
  • The total sum assured amount as chosen under the plan is payable in case of demise or total permanent disability of the life insured.
  • One of the benefits of critical illness is that it does not have the minimum survival period and based on the first diagnosis itself the benefit is paid immediately.
  • The insured can settle the claim within 21 days of receipt of all the necessary documents.
  • By paying premiums in installments the insurance buyer can easily avail the policy online by filling the application form and medical declaration form.
  • However, the insured should keep in mind that some critical illness does not cover claims that arise within 90 days from the commencement of policy.

It is very crucial for the insurance seekers to consider having a critical illness benefit while purchasing a term plan. As this can save the buyer from getting financially drained out and can help them to carry out the treatment smoothly.

Even though the process of critical illness claim is transparent, it is important to keep in mind the different aspects like understanding the rider in detail, the inclusions and exclusions of the rider and the varying cost of riders from one insurer to another.

You may also like to read: Best Term Insurance Plans in India

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