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Why Critical Illness is Important with Term Insurance

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Why Critical Illness is Important with Term Insurance?
January 24, 2024

Table of Content

 

A term insurance plan is a popular and most sought after product these days when it comes to insurance in India. As it offers a higher sum assured, most people prefer it over a general life insurance plan. However, if there is an add-on cover to your term plan, your life becomes easier. When we say an add-on cover, it is basically riders that offer enhanced protection. A rider is either included with your term insurance plan or must be purchased separately. Depending on your demands, you may choose the best rider who fulfills them.

Now riders can be of different types depending on your plan but when it comes to a term plan, critical illness rider becomes pertinent. Why? Let us explain in detail.

What is a critical illness rider?

The critical illness rider becomes a must while buying a term insurance policy. A critical illness rider provides extra financial assistance at the time of any medical emergency. A critical illness can come unannounced, hence having a rider helps in dire circumstances.

Why you must have a Critical Illness Rider?

  • This acts as an income replacement.

  • The policy holder does not need to spend extra cash as the premium stays the same.

  • With this add-on, you can avail double tax benefit.

  • It provides you add-on coverage that can take care of medical and day to day expenses.

  • It provides coverage for all the major diseases like- heart attack, cancer, paralysis, coronary artery bypass surgery, major organ transplant, stroke, kidney failure etc

How Critical Illness Rider Works?

Under this rider, the insured receives a lump-sum on the diagnosis of critical illness already specified in the policy. According to the policy's rules and circumstances, critical illness detection may continue or terminate. As a result, it is critical to thoroughly review the coverage before picking a ride. Many insurance firms are developing unique critical illness riders that also cover lifestyle diseases.

Apart from this, the insured can also take benefit of hospitalization and non-hospitalization expenses.

Things to consider while buying critical illness rider

  • If the maximum tenure of the term plan is 30 years, then the coverage continues even after claiming benefit.

  • You can save on taxes under section 80 C and 80D of income tax act.

  • The benefit amount payable is equal to the critical illness cover that the policyholder has chosen.

  • The total sum assured amount as chosen under the plan is payable in case of demise or total permanent disability of the insured.

  • There is no minimum survival period and the benefit is paid immediately based on the first diagnosis itself.

  • The claim can be settled within 21 days of receipt of all the necessary documents.

  • By paying premiums in installments, the insurance buyer can easily avail the policy online.

If you have understood all the details of a critical insurance rider, head to HDFC Life and figure out the combi plans that suit your needs the most and efficiently. For details click on the mentioned link: https://www.hdfclife.com/homepage.

Diseases covered under a Term Insurance with Critical Illness Rider in India

The rider of critical illness in term insurance covers a set of serious diseases and severe medical conditions. The list includes:

  • Cancer of specific severe stage

  • End-stage Lung Failure (Chronic Lung Disease)

  • End-stage Liver Failure (Chronic Liver disease) 

  • Coma of specified severity

  • Angioplasty

  • Surgery to aorta Heart and Artery Benefit

  • Myocardial Infarction

  • Heart Valve Surgery

  • Open Chest CABG

  • Kidney failure with regular dialysis requirements

  • Primary Pulmonary hypertension

  • Cardiomyopathy

  • Blindness

  • Deafness

  • Loss of Speech 

  • Apallic syndrome

  • Benign Brain Tumour

  • Brain Surgery

  • Stroke resulting in permanent symptoms Brain and Nervous System Benefit

  • Major Head Trauma

  • Major Organ or Bone Marrow Transplant

  • Medullary Cystic Disease

  • Third-degree Burns (Severe Burns)

  • Loss of Limbs

  • Permanent Paralysis of Limbs

  • Motor Neurone Disease with Permanent Symptoms

  • Alzheimer's Disease

  • Parkinson’s Disease

  • Aplastic Anaemia

  • Multiple Sclerosis with Persisting Symptoms

  • Muscular Dystrophy

  • Poliomyelitis

  • Loss of Independent Existence

  • Systematic lupus Eryth with Renal Involvement

Benefits of Term Insurance with Critical Illness Rider

Typically, the critical illness and disability rider in term insurance is designed to provide you with wholesome coverage of health ailments and medical emergencies. A term insurance plan with a critical illness rider has the following benefits:

One-time payment: The benefits of critical illness rider is that it is paid in a lump sum, in one go. Hence, the policyholder’s family gets an instant corpus that enables them to carry forward with the treatment without worries. 

Large cover: Treatment of critical illness is still very expensive in India. Term insurance with critical insurance cover takes care of the same by offering a large amount in a lump sum. This acts as a financial protection for the family, offering them peace of mind. 

Income substitute: If the policyholder fails to carry on with his/her profession due to critical illness, the lump sum coverage amount can act as substitute income and financial security for the family. The money can be utilized for paying rent, children’s fees or utility bills. 

Same premium: The premium amount remains the same even after diagnosis of a new critical disease within the same plan. Moreover, if the term insurance with critical illness rider has a premium waiver option, the premiums will be waived once the disease gets diagnosed.

Higher chance of survival: The massive cost of critical illness treatment often forces people to opt out of it mid-way and lose their lives. With the critical illness benefit taking care of the expenses, policyholders earn a higher probability of survival as they can continue with the treatment. 

Double tax benefits: A term insurance plan is entitled to tax deductions under section 80C of the Income Tax Act, 19611. Adding a critical illness and disability rider to a base term plan offers an additional tax benefit under section 80D1, thus offering dual advantages. 

Who should buy Critical Illness term Insurance?

Term insurance with critical illness coverage provides worry-free treatment of major diseases. However, it is excellent for the following individuals to add this rider in their term plan.

Sole earner: If you are the sole earner of the family, it’s important to financially secure your family for untoward situations like losing your job or shutting down your business due to critical illness. Here the lump sum cover can act as an income replacement that takes care of your family’s needs. 

Individuals with family history of critical illness: Those having a family history of critical illness are considered more prone to the same disease over generations. If you fall in this category, getting term insurance with a critical illness rider at an affordable premium while you are still young can be helpful. 

People in stressful jobs: If your profession involves a high level of stress and an unhealthy lifestyle, there are higher chances of falling critically ill over time. Here, the critical illness benefit in your term insurance can safeguard you. 

Those above 40: With age comes a higher probability of serious illnesses. So, once you cross 40, it is a wise bet to get covered by a term insurance with a critical illness rider. 

Eligibility Criteria of a Critical Illness Rider

Parameters

Criteria

Entry age

18-65 years

Critical Illness Benefit Ceasing Age

70 years 

Minumum Sum assured

₹50,000

Maximum Sum Assured

Lower of :

₹ 25 lakhs or

Sum Assured of the base policy

Waiting period

90 days

Survival period

30 days

Premium Payment Terms

Regular Pay - Equal to Policy Term

Premium payment mode

Same as that of the base policy

Premium payment term

Single, limited or regular pay

How to buy term insurance with critical illness cover

Buying term insurance with critical illness coverage is not a tough task. In fact, in this digital era, it’s just a few clicks away. Just follow these easy steps from the comfort of your home to get yourself covered for critical illness. 

  • Go to the term insurance page on an insurance company's website

  • Fill in the basic details like name, date of birth, gender, contact information etc. 

  • Provide the necessary information like annual income, education and occupation details, and lifestyle habits including smoking and drinking alcohol 

  • Check and compare plan options based on your shared details

  • Choose the most appropriate plan with critical illness cover

  • Make the payment  

Documents required to claim critical illness rider

To claim your term insurance with critical illness rider, you need to submit the following documents:

  • Properly filled in claim form

  • Original policy papers

  • Medical records confirming the diagnosis of the critical illness

  • All the pre and post-hospitalization records and original bills

  • Attending doctor’s certificate and related records

  • Insured person’s valid ID proof and address proof

  • Copy of cancelled cheque or bank statement of the insured

Conclusion

The pandemic has taught us how unpredictable life can get. Moreover, the stressful careers of the modern age are making us more prone to various critical illnesses. To combat the unforeseen and to cope with the massive costs of treatment involved and keep your family safeguarded from the corresponding financial burden, it’s always a wise bet to stay prepared. The rider of critical illness in term insurance is helpful for this. 

FAQs on Critical Illness in Term Insurance

Q: Is Critical Illness Insurance Cover Expensive?

The cost of critical illness coverage varies across different insurance companies. However, term insurance with critical illness coverage is less expensive than health insurance with similar coverage.  

Q: Why is a Critical Illness Insurance cover essential?

A critical illness insurance cover is essential as it safeguards you against an extensive range of critical diseases. Thus, term insurance with a critical illness rider offers you wholesome coverage for serious illnesses and related treatment.

Q: Are Medical Tests Important to Get Critical Illness Cover?

Yes, usually medical tests are important while getting critical illness coverage. These tests help in determining your health condition and deciding the premium. 

Q: How to claim Critical Illness Insurance?

To claim a critical illness insurance coverage, you need to submit the following documents:

  • A filled-in claim form

  • Original policy documents

  • Valid ID proof and address proof of the insured

  • Documents of the diagnosis of the disease

  • Bills and documents of hospitalization

  • Doctor’s certificate and medical records

  • Cancelled cheque or bank statement of the insured 

Q: Is Critical Illness Coverage with Term Insurance a wise choice for extra protection? 

Critical illness coverage is indeed a wise choice. This way, you are not only able to financially secure your family in your absence but also relieve them from the financial burden if you get critically ill. 

Related Article:

ARN - ED/12/23/7290

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Francis Rodrigues Francis Rodrigues

Francis Rodrigues has a decade long experience in the insurance sector, and as SVP, E-Commerce and Digital Marketing, HDFC Life, manages the online sales channel, as well as digital and performance marketing. He has had hands-on experience in setting up sales channels and functional teams from scratch over a career spanning 2 decades.

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Author Profile Written By:
Vishal Subharwal Vishal Subharwal

Vishal Subharwal heads the Strategy, Marketing, E-Commerce, Digital Business & Sustainability initiatives at HDFC Life. He is responsible for crafting and ensuring successful implementation of the overall organisation strategy.

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