Terminal Illness Coverage in Term Insurance

Terminal Illness is a life-threatening disease that cannot be fully treated and leads to the patient’s death. Diseases like cancer, motor neurone disease (MND), advanced heart disease, neurological diseases, lung disease, etc. fall into the category of terminal illnesses.

In case there's a higher chance of you getting terminally ill in future, and your family's medical history shows that multiple members are affected due to a critical illness, then the terminal illness insurance cover is highly recommended for you. You can add this add-on rider to your base plan or purchase a term plan with an in-built terminal illness benefit and claim an early payout of death benefit if you are diagnosed with one of the listed terminal illnesses.

What is a Terminal Illness Benefit?

It becomes expensive to get treatment for terminal illnesses and may lead to the patient's family being in a financial crisis. So, it's necessary to buy a term insurance policy with a terminal illness benefit or a rider where the insured person can claim the death benefit while they're still alive.

Still, their nominee gets the death benefit after their demise minus the terminal illness claim amount. Some insurance providers offer up to 25% of the life cover to policyholders in case their expectancy is assumed to be less than 12 months only.

Benefits of Buying Terminal Illness Cover in Term Insurance Plan

Terminal Illness rider and accelerated death benefit rider come with plenty of benefits that help an insured person suffering from a terminal disease financially.

Here, we've listed the top 5 benefits of terminal illness cover that can benefit you throughout the policy tenure.

1. Flexibility to claim some part of life cover

   The rider gives you the flexibility to claim a tax-free lump sum amount from life cover in case of the diagnosis of a terminal illness.

2. Additional life cover at low premium rates

   Terminal illness benefits also come as add-on riders in term insurance plans. Sometimes, it is built within the base plan, or you can purchase it in exchange for additional premiums. However, it may cost you up to around Rs. 400 to Rs. 500 monthly and get an additional life cover with extra protection against terminal illness.

3. Flexibility to use terminal illness insurance cover

   You can use the terminal illness insurance coverage to pay the medical and hospital expenses until the end stage of treatment. It helps an insured person go through medical treatment without worrying about their financial situation.

4. Tax Benefits

   Terminal illness rider in a term insurance plan comes with double tax benefits. Under sections 80C and 80D of the Income Tax Act, 1961, the premium you pay towards terminal illness benefits is tax-deductible, which means the premium can be used to reduce your tax outgoing on an annual basis.

Difference Between Terminal Illness vs Critical Illness Benefit in Insurance

People always make the misconception that both these are the same. So here we've listed the short distinction between Terminal Illness and Critical Illness in term insurance.

Conclusion

Terminal illness feature with a term insurance plan is an ideal option for those who have a higher chance of getting terminal illnesses in future. Some insurance providers offer terminal illness benefits in a base plan, or you can get this benefit as a rider attached to the base term plan in exchange for additional premiums. These added benefits make sure that you should always stay protected against life threatening diseases.