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Term Insurance with Critical Illness Rider

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Term insurance provides financial security to individuals and their families in case the insured individual passes away during the tenure of the policy. However, in addition to death coverage, there are additional risks to consider with respect to term insurance (like critical illnesses and more) that can have a significant impact on one's life and finances.

To address this concern, a lot of insurance companies offer critical illness riders as an add-on to term insurance policies. In this article, we will dive into the benefits of critical illness riders and why they are an essential consideration when purchasing term insurance.

Understanding Critical Illness Riders

A critical illness rider is an optional feature that can be added to a term insurance policy. This add-on, as the name indicates, provides coverage for specific critical illnesses as mentioned in the policy document.

If the policyholder is diagnosed with a covered critical illness during the policy tenure, the rider provides a lump sum benefit to help cover medical expenses and provide financial support during the recovery period.

Coverage of Critical Illness Riders

Similar to basic inclusions of term insurance, the critical illnesses covered with such a rider may vary across insurance companies and policies. However, some common critical illnesses covered by these riders include cancer, heart attack, kidney failure, stroke, major organ transplant, paralysis, and coronary artery bypass surgery, among others.

It’s crucial to review your policy documents to understand the specific illnesses covered under the rider.

Benefits of Critical Illness Riders

Critical illness rider comes with a plethora of benefits such as -

  • Financial Protection: With a critical illness, an individual can face significant medical expenses, loss of income, and lifestyle changes. By opting for a critical illness rider, individuals can ensure that they get a lump sum amount if they are diagnosed with a critical illness covered as per the rider. This benefit can help cover medical bills, rehabilitation costs, loan repayments, and other financial obligations, ultimately providing much-needed financial stability during a challenging time.
  • Coverage in Addition to life insurance: While term insurance provides a death benefit to the nominee, it may not cover the financial burden associated with a critical illness. The best critical illness riders bridge this gap by offering dedicated coverage for medical expenses and related costs. This ensures that policyholders have comprehensive protection against both death and critical illnesses, offering peace of mind to themselves and their families.
  • Flexibility and Customisation: Critical illness riders provide flexibility in choosing the coverage amount based on individual needs. The rider amount can be selected independently of the base term insurance coverage. This way, individuals can seamlessly customise their policy by selecting a rider amount that aligns with their specific financial requirements in case of a critical illness.
  • Survival Benefit: Unlike traditional health insurance plans, which reimburse actual medical expenses, the best critical illness riders provide a lump sum benefit upon diagnosis, regardless of the actual medical costs incurred. This lump sum amount can be utilised at the policyholder's discretion, offering greater flexibility in managing medical expenses and treatments as well as regular financial requirements during the recovery period.

Factors to Consider

When buying a critical illness rider, there are certain factors to consider to make the right choice according to your individual needs -

  • Premiums: Adding a critical illness rider to a term insurance policy can bring an additional cost in the form of rider costs. For this reason, it is important to consider the affordability of the rider and its impact on the overall premium amount. Comparing different insurance providers and policies is a great place to start to find a rider that provides comprehensive coverage at an affordable price.
  • Waiting Period: Critical illness riders generally come with a waiting period from the policy inception, typically ranging from 90 days to 180 days. During this waiting period, no claims related to critical illnesses will be entertained. It’s essential to understand the fundamentals of the waiting period associated with the rider before making a purchase decision.
  • Survival Period: Some critical illness add-ons require a survival period after the diagnosis of a covered illness. The survival period, as the name suggests, refers to the duration for which the policyholder must survive after diagnosis to be eligible for the rider benefit. While this period is typically 30 days from the date of diagnosis, you, as a policyholder, should carefully go through your policy documents to be aware of the survival period.

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