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Why Is It Essential To Add A Critical Illness Rider To Your Term Insurance Policy

Term insurance plans provide financial security to your family in case of numerous uncertainties. These uncertainties can range from accidental death, loss of income, critical illness, etc. Such instances can become challenging for your family, so it’s best to make contingency plans for such situations and get a critical illness rider with your term insurance policy.

 

Whenever you venture to buy term insurance, remember that there are several kinds of riders that you can also consider. Riders are helpful add-ons that guarantee additional coverage for diverse situations in life. While many types of riders are available today, critical illness is one of the most popular options for policyholders. Getting this rider means higher protection from the financial strain of treating any critical ailment. However, you will have to pay an additional premium over and above what you pay for your regular term insurance policy.

 

You can utilize a term insurance premium calculator to work out the figure payable monthly, quarterly, or bi-annual/annual basis (depending on what you have chosen). However, experts feel that paying this additional amount could be worth it eventually! So, let us first look at the concept of a critical illness rider before learning more about why you need the same.

 

What do we mean by a critical illness rider?

A critical illness rider is essential while purchasing a term insurance plan. It offers additional financial support during the diagnosis of any critical illness. You can add this rider to your term insurance policy and pay an extra amount as the premium for it. Upon the diagnosis of a critical illness, the rider will pay out a pre-agreed lump sum that will help meet treatment costs while also serving as a replacement for the family’s loss of income in this period.

 

Why you should add a critical illness rider to your term plan

The addition of a critical illness rider to your term insurance policy will be a smart move. These are the reasons worth noting in this regard.

 

  • Covering For Income Losses- In a situation where an earning member gets diagnosed with a critical illness, the rider makes up for the loss of income for a specific period. The family members will not have to worry about income deficits and monthly household budget compromises. It helps family members get some time to overcome the situation without worrying about how to run the household at such a stressful time.
  • Added Tax Benefits- Adding a critical illness rider to your term insurance policy makes you eligible for additional tax deductions up to Rs. 25,000 (Rs 50,000 if the policyholder is over 60) under Section 80D of the Income Tax Act. While you get deductions on your term insurance premium payments under Section 80C, the rider can help you maximize your tax savings since Section 80D deductions apply only for premiums paid for health coverage.
  • Coverage For Medical Treatment Costs- With healthcare costs increasing steadily across India, a critical illness rider is vital for meeting medical expenditure upon diagnosis of any critical illness. A lump sum payout will help policyholders get the best possible treatment and save the hassles of gathering funds from multiple sources. It will help you avoid the depletion of the family’s savings and investments to meet medical expenses.
  • Same Premium Amounts- The premium amount will be the same throughout the policy tenure. In case of a critical illness diagnosis, the premium will not go up since it has been fixed earlier.

 

A critical illness rider covers several ailments like cancer, heart attacks, organ transplants, coronary artery bypass surgeries, paralysis, strokes, and kidney failures. With the financial aspect in place, policyholders will not have to worry about anything else, including income losses. They can concentrate on making a full recovery instead. However, there are still a few things that you should remember while buying this rider.

 

What to know while purchasing a critical illness rider

You should be aware of some finer points while investing in a critical illness rider over and above your term insurance policy. These include the following:

 

  • The coverage will continue even after the benefit is claimed in case the maximum tenure of the term insurance policy is 30 years
  • The payable benefit amount is equivalent to the critical illness coverage chosen by the policyholder
  • No minimum survival period is present, with the benefit paid instantly upon the illness being diagnosed
  • Claims may be settled swiftly once all documents are submitted
  • Premiums can be paid via instalments along with the regular term policy premiums
  • Buyers should check the rider document for inclusions and exclusions (for illnesses)

 

Conclusion

These are some core aspects that come into play while buying a critical illness rider. Getting this rider is essential since life is uncertain and critical illnesses do not appear with warnings. In addition, it will ensure additional financial coverage and mental peace alike.

 

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Christophe Rude

Christophe Rude

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