Imagine that someone you know is told that they have cancer. It is a devastating blow, not only emotionally but also financially. The medical bills start to accumulate, and the costs of treatment appear too high.
This is where a term plan with critical illness cover kicks in. It is like a safety net, giving you financial security when you need it the most. So, scroll down to explore the significance of critical illness coverage in today’s uncertain world and its role in securing your financial future.
Also read: Knowing about critical illness insurance policies in detail
Understanding Term Insurance & Critical Illness Cover
Critical illness cover is an add-on that can be attached to your term insurance plan. It covers you against the expenses of treatment if you get diagnosed with any of the listed illnesses included in your policy. These are likely to include the most common life-threatening diseases, such as cancer, heart attack, stroke, kidney failure, etc.
When you opt for term insurance with critical illness coverage, you can receive the insured amount if you are diagnosed with a covered ailment. This money can help you settle hospital bills, medication expenses, doctor’s charges, ambulance fees, or any other needs during your treatment.
Also read: Why is looking at the term insurance Claim settlement ratio important
Benefits of Term Plan with Critical Illness Cover
Term plan with critical illness coverage offers numerous advantages, which are as follows:
- Financial Protection for Covered Events
Term insurance with critical illness cover provides crucial financial protection for covered events. If something happens to you, it ensures your nominee receives a lump sum payment, offering vital financial assistance. The additional critical illness cover gives you a huge amount to manage medical expenses and related costs.
- Acts as Replacement for Lost Income
It helps you by giving you the assured sum immediately in case of serious illness. This amount can be spent for any purpose. If you are not working because of an illness, this payout will serve as a temporary source of income.
- Coverage for Medical Costs
Critical illnesses often bring unexpected medical expenses, not all of which are covered by health insurance. The payout from the critical illness add-on can be highly beneficial here, as it can be used without restrictions.
- Increased Chances of Survival
This additional feature can enhance your likelihood of survival by eliminating financial obstacles and allowing you to access the most optimal treatments available. Hence, critical illness coverage is highly recommended when getting a term plan.
- Double Tax Benefits
Critical illness coverage allows you to enjoy double tax benefits. Your base term plan premium is tax-free under Section 80C of the Income Tax Act, and the extra premium for this rider qualifies for a tax rebate under Section 80D.
Also read: How to Plan for 2 Major Purchases in Life
Factors to Consider Before Buying Term Plan with Critical Illness Cover
Here are some factors you must consider when buying a term insurance policy with critical illness coverage:
- Covered Illnesses
Ensure to review the list of critical illnesses covered by your insurance provider. The amount you receive depends on the specific critical illness cover you select.
- Inflation
When determining your coverage, consider the inflation rate. Due to inflation, medical costs rise significantly each year.
- Waiting Period
Critical illness policies typically have a waiting period before they become effective. This period varies among insurance providers, ranging from weeks to years. Choose a policy with a shorter waiting period.
- Treatment Expenses
Medical expenses and treatment costs are constantly increasing, especially for critical illnesses. Research the costs of treating major diseases and plan your coverage accordingly.
- Coverage for the Recovery Period
Most critical illnesses require an extended recovery period. Assume a recovery period of around 5 years and ensure you have enough coverage to support your finances.
- Benefit Amount
The critical illness determines the benefit amount you receive cover you select. Make sure it aligns with your needs and financial situation.
Thus, adding critical illness cover to your term insurance policy can be a wise decision to safeguard yourself from unexpected medical expenses. However, before deciding, you must consider the abovementioned factors and choose the right plan that aligns with your needs.
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