Understanding Terminal Illness Rider: Features and Benefits

An illness is termed as ‘terminal’ when medical procedures can only be used to cure it, just to maximise the survival period of the affected; however, the symptoms will eventually lead to death. Terminal illness is sometimes also called life-limiting illness. 

Being diagnosed with a terminal illness is nothing short of a living nightmare. The realisation that your life will slowly come to an end is not only challenging for you but also for your loved ones. The worst part? Emotional turmoil will not be the only problem your family has to face. Most terminal diseases are infamous for high medical bills. 

If you are the family’s sole breadwinner, the overwhelming weight of medical bills and lack of income can put a massive dent in your family’s finances. Needless to say, a standard life insurance policy will not provide enough financial protection for your family. Therefore, in addition to your standard plan, you should add on a terminal illness rider to battle the crisis for your family bravely. 

What Is A Terminal Illness Rider?

Terminal illness rider is an additional protective cover that can be purchased along with your standard term life insurance policy. It provides you with a lump sum payout in case you are diagnosed with a terminal disease. A terminal illness rider can be a financial saviour during those difficult times. 

Wondering how exactly this add-on works? Let us understand this with Arvind’s example. 

Arvind has always managed to live a reasonably healthy life. However, in his mid-40s, he was diagnosed with lung cancer. Although doctors determined that he only had less than one year to live, Arvind still had to go through costly medical treatments. To make matters worse, he also lost his job during this ordeal. 

However, Arvind had added the terminal illness rider to his term life insurance plan. The early payout from the rider enabled him to cover expensive medical treatments, manage daily expenses, and secure his family’s financial stability during this challenging period. 

This shows how a simple terminal illness add-on can prove to be a huge help in safeguarding your family’s financial well-being. It is generally a free add-on for most providers, however, in some policies users have to choose this by paying some minimal additional premium.

Difference Between Critical And Terminal Illness

Most people confuse a critical illness rider with a terminal illness rider. However, these are very different from each other. Here are some significant differences between the two add-ons:

Benefits Of A Terminal Illness Add-on

Adding a terminal illness rider to your standard term life insurance can open the gates to the following benefits: 

1. Income replacement: If you lose your source of income, the rider can provide financial support. This added financial aid can help you cover daily expenses with ease. 

2. Medical bill coverage: Terminal illness rider provides a part of the insurance cover amount as an immediate payout. This money can be used to cover expensive medical treatments and healthcare services.

3. Debt payoff: If you have taken a substantial debt, the insurance amount can help you settle those liabilities without any financial strain.

4. Tax benefits: The premium of your term life insurance with a terminal illness rider is exempt under sections 80C and 80D of the Income Tax Act. 

Key Takeaways

Life insurance, in itself, is a reliable tool to protect your family’s financial security. Adding a terminal illness rider further enhances that insurance coverage. By covering the expensive treatment costs and providing a replacement income, the rider offers substantial financial support at the time of need. Consider exploring platforms like PhonePe to easily add and manage terminal illness riders to your life insurance policy.