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Terminal Illness in Life Insurance

Illnesses can be unpredictable and can strike anyone at any time. Thus it is always better to be prepared in advance than to suffer in the future. A terminal illness rider in life insurance covers the policyholder financially in case he/she is diagnosed to be terminally ill during the policy term. Most plans offer the terminal illness rider in-built within the plan for the policyholder’s benefit, which means you won’t have to pay any extra amount to get rider coverage against terminal illness. 

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What is Terminal Illness in Life Insurance?

Terminal illness or accelerated death benefit in life insurance refers to the benefit amount paid to the policyholder in advance on the diagnosis of a terminal illness which may lead to an unfortunate death within six months. This is an important term insurance rider that provides enhanced coverage to the policyholder against terminal illnesses during the policy term. To receive the benefit amount, the policyholder has to be declared terminally ill by two IMA-certified doctors within the policy tenure, and the insurer will pay out the applicable terminal illness benefit amount to the policyholder. 

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Why is Terminal Illness Rider Needed in Life Insurance?

You need a terminal illness rider in life insurance to help secure yourself and your family in case you are diagnosed with a critical illness during the policy term. Let us take a look at why you need terminal illness cover in your life insurance.

  • Financial Protection: The plan provides financial protection to the policyholder and their family by providing them with a benefit amount to help take care of necessary expenses like medication costs and any other financial obligations.

  • Long Term Cover: A terminal illness in life insurance provides cover to the policyholder for a long term, till 85 years of age. The maximum coverage in different plans may differ, therefore, it is better to check the policy details before purchasing the plan.

  • Protect Your Savings: With a terminal illness cover in life insurance, you can use the benefit amount payable in case of a terminal illness instead of using your savings to pay for the treatment costs. This way, you can save your savings to use it for any financial emergency.

  • Pay off Hospital Bills: You can use the payout received from a terminal illness rider in life insurance to pay for the expensive treatment costs and medical bills that may otherwise put you under financial stress.

  • Peace of Mind: With an accelerated death benefit rider, you can live with peace of mind knowing you and your family will be financially stable in case of a terminal illness diagnosis.

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What are the Benefits of Buying a Life Insurance with Terminal Illness Cover?

Here is a list of benefits of buying a life insurance plan with terminal illness cover:

  • Large life cover at affordable premiums

    You can get a terminal illness cover with life insurance at highly affordable premium rates. This is because most plans offer the rider as an in-built benefit or as a paid benefit, which can be added at highly affordable premiums.

  • Replaces income in case of a job loss

    In case you are diagnosed with a terminal illness, the illness might cause you to lose your job. In such cases, you and your family may suffer taking care of your monthly expenses. Thus, a terminal illness benefit amount can help you pay for your bills and act as an income replacement.

  • Improve chances of survival

    With the accelerated death benefit payout amount, you can get better access to quality healthcare, thus allowing you to get treatment at the best hospitals in the world. This way, your chances of survival are increased, and you can recover from the illness in peace.

  • Take care of debts and loans

    You can also use the rider payout amount to pay for any remaining loans or debts like home, car, or student loans that you might have taken out in your lifetime. This reduces the stress that may fall on you in times of financial crisis. 

  • Increased Tax Benefits

    Similar to term insurance, life insurance plans also offer you tax benefits under sections 80C and 10(10D) of the Income Tax Act of 1961. But with an accelerated death benefit rider included in the plan, you can also claim tax benefits under section 80D.

Final Thoughts

The Accelerated death benefit rider is an important and beneficial optional benefit that can provide you with financial help in case the policyholder is diagnosed with a terminal illness. In most life insurance plans, you can enjoy the benefit of this rider at no extra costs, but in case the plan of your choice does not offer this rider in the base plan, you can add it to the base plan by paying extra premiums. Always make sure to check the policy documents of your preferred plan to see the benefits and their exclusions to get a better understanding of the terminal illness rider’s coverage.

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