What is the critical illness rider and why should it be purchased with your term insurance?, Health News, ET HealthWorld

Do you really need critical illness cover? Why is it a must with your term insurance plan? If you are looking for the answers to this question, know that critical illness insurance comes in handy in the most unexpected scenarios that often leave many people unprepared. Plus, additional riders on term insurance plans will increase the overall value of your coverage. You can pay a nominal additional amount to include these riders in your term insurance plan. Critical illness coverage is the most common and popular rider you can include on your policy. It provides additional coverage for an insured sum that can help you financially with your medical expenses in case you are diagnosed with a critical illness.

What illnesses are covered by critical illness insurance plans?

Critical illness insurance generally covers various types of illnesses, including kidney failure, cancer, major organ transplants, heart attacks, coronary artery bypass grafts, aorta transplants, etc. It also covers stroke, limb paralysis, primary pulmonary arterial hypertension. , and multiple sclerosis, which has ongoing symptoms. You should refer to the policy document for a detailed list of coverages.

How it works?

Before we dive into how critical illness insurance works, let’s take a scenario in context. Suppose a person has a term insurance plan that protects his family’s financial future by

event of their unfortunate disappearance during the period of insurance. They used a term insurance calculator and also selected the optimal coverage. This is a prudent step taken in law

direction. But they forgo any additional critical illness coverage and get regular health insurance instead. In this case, upon diagnosis of a serious illness, it turns out that the basic health insurance coverage is insufficient to cover the treatment and other costs, hindering access to the best treatments and resources and reducing considerably the chances of survival. The pure term insurance plan will not help in this regard. Therefore, to combat and avoid such situations, you must choose a critical illness rider to accompany your temporary plan.

If a critical illness is diagnosed after a predetermined waiting period (if applicable), a lump sum payment is made to the policyholder. This helps plan and pay for future treatments.

Plus, when you combine your term plan with critical illness coverage, you get additional tax benefits. Premiums for a basic term plan (up to ₹1.5 lakh) are exempt from income tax under Section 80C of the Income Tax Act 1961, while Premiums paid for critical illness coverage are exempt under Section 80D of the Act. In addition, Section 10 exempts your term policy (10D) benefit payments.

This endorsement will provide coverage for the cost of treatment for any serious or life-threatening medical condition that the policyholder has been diagnosed with. In addition, it can also cover recovery and rehabilitation costs. The critical illness insurance rider ensures receipt of this lump sum payment, as mentioned, upon diagnosis. At the same time, the person can use the funds for non-hospitalization and hospitalization expenses according to the terms and conditions of the policy. However, before signing on the dotted line, you should always check coverage and inclusions/exclusions.

A few other things to remember

Here are some other essential things you should keep in mind:

  • Each term insurance rider has its own set of benefits
  • This rider can improve the overall chances of survival since policyholders have access to adequate funds for the best treatments. This ensures that policyholders can access all necessary resources for proper medical diagnosis and treatment.
  • You should always consult the list of illnesses covered by the critical illness rider
  • Remember that a waiting period, if any, must end before the policyholder can receive benefits.
  • Benefits are only paid after diagnosis of a serious illness, according to the terms and conditions of the policy
  • A critical illness rider helps you get additional medical insurance coverage for a single premium. You only have to add an extra sum and do not pay separate premiums
  • The sum insured of the endorsement is often similar to the basic insurance policy, with sometimes a limit to the maximum sum insured

Now that you have a basic understanding of critical illness riders and why they are essential, review the available options and choose the one that best suits your needs accordingly.

Earnest L. Veasey