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A term plan is an umbrella cover that extends to your family members along with you. It is one of the easiest ways to cover your loved ones and secure their future in case of any financial emergency. A financial emergency may arise due to situations like the sudden death of the sole earning member of the family, loss of income, or diagnosis due to a critical illness. Getting critical illness covered with your term plan becomes extremely necessary for times like these.
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Before we get to the reasons to avail of critical illness benefits, let us first understand what term plans are. Term plans are an official agreement between the policyholder and the insurer.
Under the agreement, the insurer pays a certain sum of money to the policyholder’s beneficiary or nominee. The money will be paid only in case of the policyholder’s sudden demise within the policy period.
A term plan also protects against critical illness or accidental disability by adding a relevant rider to it.
When a term plan provides a critical illness cover, it means that the plan financially covers its customers against expenses from the diagnosis of critical illnesses. The plan covers major illnesses like cancer, paralysis, heart diseases, loss of limbs, etc. The policy usually states the coverage of these diseases and the next course of action after the policy holder’s diagnosis.
Critical illness benefit is an extra cover that you choose to add at the inception of the term policy. You need to pay an extra sum of money for this added benefit. This may make the call for a critical illness cover expensive.
It is certainly a prudent call to make as it adds to your sense of security, especially during difficult times. Here are the reasons why you should opt to avail this raider benefit.
Critical illnesses are usually associated with high medical expenses. The patient and his/her family incur heavy medical bills from hospitalization to medicine and tests. You can even avail of a cashless claim or opt for a lump sum amount as per the plan's terms and conditions. You can use the amount as the pool for all your medical expenses after the diagnosis.
Tax concessions under Section 80c of the Income Tax Act 1961 are extendable with critical illness cover under Section 80D of the same act. The proceeds further are exempted under Section 10(10D) allowing you to avail of the benefit of saving taxes on two counts.
*Tax benefit is subject to changes in tax laws. Standard T&C apply.
In the fast-moving world, it is convenient to have more than one head earning for the family. There may be a situation where only one member is earning.
When this sole earning member gets diagnosed with a critical illness, it may render him/her unable to continue work. The pressure of a loss of income is immense in such a case on both the person as well as the family members.
The critical illness cover will act as an income replacement for you. It will help maintain a consistent flow of money into your house without you being able to work. This inflow will also ensure that your family can take care of family expenses without scrambling smoothly.
Recovery is not very pleasant, especially if you have had a loss of income and are suffering from a critical illness. The road to recovery is full of stress. This stress further can prolong your recovery.
To ensure you do not borrow or take further loans to pay for your medical expenses, opt for a critical illness cover. A critical illness cover with your term plan will help you navigate your way out of this illness. The cover helps you sail through your illness in a stress-free manner where your entire focus will be on getting fit.
Say you are diagnosed with a critical illness during the policy tenure, your policy premium remains the same. The reason is that the premium has already been factored in your premium calculation at the policy inception. A critical illness rider will support you in your illness at all stages rather than add to your stress of the illness and medical expenses.
Your critical illness cover will not work in the following cases:
There is a 30 day waiting period. So if you were diagnosed with a critical illness before purchasing the policy or during this 30-day waiting period, then the policy will not cover it.
Different insurers cover different illnesses. If you suffer from a condition that is not a part of the specified illnesses mentioned, the policy will not cover it.
Self-inflicted injuries, suicide attempts, sexually transmitted diseases, and HIV/AIDS are not covered by most of the insurance providers under this cover.
Pre-existing diseases, pregnancy, or congenital medical conditions (unless specified).
War inflicted injuries or illnesses arising due to radioactive exposure.
Non-critical illnesses like cosmetic surgery or bariatric surgery.
Illnesses or injuries caused due to indulgence in adventure sports like racing or sky diving, etc.
There are several exclusions to what diseases and ailments are covered by your term plan with critical illness benefits. You need to carefully go through the policy document to get a fair idea about the illnesses and cover.
Go through the terms and conditions of the policy in detail. Be aware of the policy terms so that you know what to expect in the form of benefits.
While purchasing a critical illness rider, make sure you go through the list of critical illnesses as mentioned in the policy cover. The purpose of this scan is to ensure the policy covers diseases that you are more likely to get. You need to identify the most common critical illnesses as well as the ones that run in your family.
To assess the sum insured needed by you, consider inflation along with the general idea of medical expenses in your area.
You also need to make a cautious note of exclusions. Understand them thoroughly for a hassle-free claim later on.
Claim settlement ratio is one aspect that must factor in your research before purchasing a term policy. Ensure smooth claim process and transparency of settlement before finalizing your purchase.
A critical insurance benefit along with your term plan cover is beneficial as it has fixed benefits. It is a great way to protect yourself and your family from the sudden need for expensive medical procedures. While some insurers offer coverage for a few ailments, others offer coverage for as many as 35 or 50 ailments. Research well and compare and contrast several policies online before finalizing your purchase.
†Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by any insurer. This list of plans listed here comprise of insurance products offered by all the insurance partners of Policybazaar. For a complete list of insurers in India refer to the Insurance Regulatory and Development Authority of India website, www.irdai.gov.in
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