Terminal Illness Rider in Term Insurance Plan – Know Meaning and Benefits | Detailed Guide


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Term Insurance Plan with Terminal or Critical Illness Rider

Illness does come uninformed and when something as unfortunate as terminal illness is diagnosed, it does tend to add a lot of burden on the affected persons. This is where terminal illness riders in term insurance can help. Read the blog to know all about it.

Terminal illness diagnosed for an individual can indeed be heartbreaking. It essentially implies that the disease is non-curable and that the patient has a very limited life expectancy remaining. In such difficult times, the financial burden gets added on as well, when a huge expenditure needs to be incurred on the treatment and care of the patient. Thanks to the term insurance policy, a major part of these costs can be covered for the patient and their family. And to help them further, most insurers offer additional financial protection by way of a terminal illness rider.

Here we share a detailed guide covering everything you need to know about the terminal illness rider in the term insurance plan.

What is a Term Insurance Plan?

For starters, let’s begin by quickly understanding the term insurance policy meaning. Term insurance is designed to offer financial coverage to the beneficiary(s)/nominee(s) of the insured in case of the latter’s death. It is a monetary death benefit offered by the insurer to the bereaved family of the late insured with the intent to assist them financially in these difficult times.

You can easily check up online several options for term insurance offered by a number of insurance companies. After going through all of their features and benefits, you may choose the best term insurance policy in India. Of course, buying an online term insurance policy is always convenient but you can also opt for a visit to the insurer of your choice for your personal satisfaction before buying the policy.

Moreover, term insurance can be purchased both as an individual plan (for 1 person) or as a group term insurance policy for a group of people together (usually family members). You also now have the online facility to compute the exact coverage you require as per your insurance needs via a term insurance policy calculator. It is easily available online and allows you to make your own calculations at home before purchasing a term insurance plan with the insurer.

What are the benefits of terminal illness cover?

What is Terminal Illness?

As discussed earlier, your term insurance policy can provide an additional benefit in the form of a terminal illness rider on extra payment. Let us look at what is terminal illness in term insurance.

Terminal illness refers to any disease or health condition wherein the life expectancy of the patient diagnosed is merely 6-12 months. Such a serious condition can be called terminal illness meaning that it is incurable and may only result in death. Here are a few terminal illness examples for your easy understanding:

  • Dementia
  • Lung disorder
  • Advanced stages of cancer
  • Tumors
  • Alzheimer’s
  • Parkinson’s Disease
  • Critical heart diseases, including stokes and heart attacks
  • Type 2 Diabetes

If a person is diagnosed with any of the above, terminal illness insurance cover can help provide financial assistance to the patient and their family members by covering the healthcare costs involved in the treatment.

Terminal Illness vs. Critical Illness

Are terminal illness and critical illness the same or is there any difference? Let’s find out.

Both these forms of illnesses are serious; however, there is a small difference in the usage of both, meaning that they cannot and should not be used interchangeably.

When we say critical illness, it refers to a serious medical illness, disease, or injury to any body part, such as kidney failure, Bypass Surgery, organ transplant, Multiple Sclerosis, and the like.

However, reference to terminal illness is made when doctors confirm that the illness or health condition of the patient is incurable and would eventually result in their death within a year.

Terminal Illness Symptoms

Let’s also now learn about the symptoms of terminal illness that help identify whether or not the illness or health condition is terminal in nature.

  • Severe and often persistent pain
  • Excessive fatigue
  • Nausea and vomiting
  • Constipation
  • Anxiety
  • Depression
  • Respiratory problems

What is a Terminal Illness Rider in Term Insurance?

All riders in insurance are aimed at providing additional coverage or protection to the insured over and above what is provided in the base policy. These riders can be purchased separately either at the time of buying the insurance plan or while renewing the policy.

A terminal illness rider provides considerable financial assistance to the life assured and their family in case of diagnosis of any terminal illness. In fact, a terminal illness benefit means that 100% of the sum assured promised under the rider is paid out to the insured. Note that this benefit is made available only when the insured is diagnosed with terminal illness during the coverage period of the term insurance policy.

Also note that once the insurer pays out the monetary benefit covered under the terminal illness rider to the life assured, he/she would not be entitled to receive coverage under the rider anymore. Also, your insurer would expect you to inform them about the diagnosis of terminal illness within 3 months of the diagnosis, failing which the insured would not be eligible to receive the rider benefit.

Benefits of a Terminal Illness Rider

Here are some advantages of buying the terminal illness benefit rider in addition to your base term insurance policy:

1. Lump Sum Payout:

This is the most important benefit to the life assured in case he/she gets diagnosed with a terminal illness. The insurer would immediately pay out the sum assured amount to the person in lump sum for covering the cost of the treatment.

2. Financial support:

The sum assured provided by the insurer provides enough financial assistance to the insured as well as their family members during those difficult times.

3. Extension of Coverage:

The base term insurance policy does not cover treatment cost for terminal illnesses. However, with the addition of the terminal illness rider to the plan, the insured stands to receive extended coverage which includes cost of treatment for the condition, which is generally very high in India.

4. Tax Exemption:

The rider benefit is also exempted from tax payment under Section 80C and Section 10(10D) of the Income Tax Act, 1961.

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To Conclude
A terminal illness can cause great difficulty, both physically and financially, to the person diagnosed and their loved ones. Buying a terminal illness rider in term insurance can help ease out that difficulty to a great extent.
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Aug 26, 2022
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PayBima Team
PayBima is an Indian insurance aggregator on a mission to make insurance simple for people. PayBima is the Digital arm of the already established and trusted Mahindra Insurance Brokers Ltd., a reputed name in the insurance broking industry with 17 years of experience. PayBima promises you the easy-to-access online platform to buy insurance policies, and also extend their unrelented assistance with all your policy related queries and services.

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