5 Reasons Why Term Plans Should Include Critical Illness Coverage

In our quick-paced world of constant surprises safeguarding one’s family's financial future requires more than standard term insurance. To enhance the shield of security from unpleasant eventualities, term insurance with critical illness cover has become imperative for comprehensive protection against life's unexpected health challenges.

Before we explore the importance of critical illness riders in term insurance, let’s first understand what it means.

What is Critical Illness Cover in Term Insurance?

Critical illness coverage takes care of the medical expenses of the policyholder if they are diagnosed with a critical illness during the term plan. Investing in term insurance with critical illness cover means that the policyholder will have financial support against a variety of life-threatening ailments such as heart ailments, kidney failure, or cancer.

How Does Critical Illness Coverage Work?

Critical illness rider in term insurance enhances the coverage of the base term plan by securing the insured member against all the critical illnesses that have been listed under their term insurance policy. It does this by offering a lump sum payout on the diagnosis of a critical illness by paying a nominal price.

Let’s understand how critical illness cover in term insurance works with an example:

Consider that 25-year-old Anu has invested in a term critical illness insurance which was an additional ₹10 lakhs to the base coverage of her 1 crore term plan. This increased her premium from ₹700 to ₹900 per month. Now, unfortunately after a few years, Anu suffers kidney failure and requires regular dialysis. Since this ailment is covered under her critical illness coverage she will receive the sum of the add-on cover which was ₹10 lakhs to pay for her treatment.

Once this payout is completed, her term policy continues as normal, and she is covered under the policy benefits for the remaining tenure.

Reasons Why You Should Invest in Term Insurance with Critical Illness Cover

• To make up for the income loss

  When a sole breadwinner with dependents is diagnosed with a critical illness, the entire family is thrust into an intensely stressful situation. The patient is prohibited from working to help with their recovery but would be strained thinking of the financial burden of paying for the treatment.
  On several occasions, patients’ families are forced to take on debt to pay for the treatment costs. To prevent such a scenario, taking care of these contingencies becomes crucial. The critical illness rider in term insurance will act as an income replacement so that treatment and household expenses are duly looked after.

• To take care of the exorbitant treatment expenses

  Treatment and hospital bills are exorbitant these days. Right from tests for diagnosis to medication and hospitalisation expenses – everything comes at a heavy cost. However, with a term critical illness insurance all these expenses are looked after, so you don’t have to run around collecting funds from varied sources to pay for your treatment.

• To focus on recovery

  Overcoming a critical illness needs a lot of mental strength. When the patient is not worried about household expenses and medical bills, they can recover faster.

• To pay affordable premiums

  If you are diagnosed with a critical illness and have invested in term insurance with critical illness cover, your premiums will not increase and will remain the same for the entire duration of the policy. Those costs are already factored in by the insurance provider at the time of insurance purchase.

• To receive tax concessions

  Pairing your term plan with critical illness coverage brings extra tax benefits. While Section 80C of the Income Tax Act covers term plans, Section 80D exempts critical illness policies. Moreover, Section 10(10D) excludes proceeds from your term policy's features, providing dual tax savings.

Conclusion

With a critical illness rider in term insurance, an individual is protected not only against the expected but also against life’s curveballs. Term critical illness insurance helps you forge a robust shield that strengthens your financial well-being in the unpredictable journey of life. So, if you do not have a critical illness rider, you may choose to browse PNB MetLife’s serious illness riders.