Term insurance is a basic form of life insurance. It offers life cover to the policyholder for a fixed period. The tenure is determined by the policyholder during the purchase of the plan. In case of the sudden demise of the policyholder within the tenure of the plan, the nominee receives the sum assured. The reason several individuals buy term insurance is that they can get a sufficient sum of coverage for affordable premiums. This leaves the policyholder relieved that in their absence, their family will not face any financial turmoil.
The thumb rule that most policyholders follow is choosing a sum assured that takes care of the needs of their family over the years along with repaying their debt. With typical life insurance, this would be expensive. However, traditional life insurance offers sufficient coverage with ease. When you buy term insurance, you get the option of choosing riders for your base plan. These riders are additional benefits that you get for which you have to pay additional premiums. There are several rider options available. However, let’s understand why individuals who are buying term insurance should have a critical illness rider along with it.
What is a critical illness rider?
Once you understand the meaning of the term insurance, it is easy to understand their riders as they work similarly. When a policyholder is severely ill, a critical illness rider provides them with a certain degree of financial security. When a policyholder buys a term plan, they get the base plan. If they want to opt for the critical illness rider, they are required to pay an additional premium over their existing one.
A critical illness benefit rider is an essential add-on since it provides coverage to the policyholder against critical health conditions of the heart, liver, and even ailments like cancer. While health insurance suffices to cope with most illnesses financially, the same cannot be said when an individual is diagnosed with a critical illness. This is because the diagnosis of critical illness comprises long treatments and even several aftercare practices. The treatment of a critical illness is expensive and causes financial turmoil to the person diagnosed and their family.
For critical illnesses like cancer, one dosage of medicine may cost thousands of rupees. The complete treatment comprises multiple doses. The hospitalisation, surgeries, and medications overall lead to the treatment costing lakhs of rupees. Over time, the cost of treatment adds up, hampering an individual’s financial and emotional wellbeing. Adding a critical illness rider to your term insurance is one way to avoid such a situation altogether. You can use a term insurance plan calculator to get an estimate of the coverage you have to pay after adding the rider. While buying your policy, you get to decide the amount you need for your critical illness rider. Based on that, the term insurance further calculates your premium.
Why buy a critical illness rider with term insurance?
Most term insurance plans cover the same list of illnesses under the critical illness rider. Some major illnesses that are usually included in all critical illness riders are heart attack, major organ transplant, cancer, kidney failure, stroke, and several other critical illnesses. You must read the fine print and use tools like a term insurance plan calculator before buying the plan. Here are some benefits you get when you add a critical illness rider to your basic term insurance plan:
- It acts as an income replacement during tough times when the policyholder is recovering from their critical illness.
- The rider lessens the financial burden by covering medical bills and everyday expenses.
- Your term insurance tax benefit also increases as the additional rider premium is also exempt from taxes.
- Offers a comprehensive coverage where the policyholder’s diagnosis and treatment of a critical illness are covered.
- Lessens the financial burden and stress on the policyholder and their family.
- Most insurance companies usually pay the benefits immediately after the diagnosis.
The above reasons are worth considering for clubbing a critical illness benefit rider to your basic term insurance plan. If you feel doubtful because of the additional premium that you have to pay, your term insurance tax benefits will increase too. This is because any add-on premium that you pay for a critical illness rider is also exempt from taxes.
