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Does Life Insurance Cover Terminal Illness?

There are a lot of insurance companies that include terminal illness benefits in their policies. However, you can always add it as an extra rider to your base plan if they don’t.

  • 5,052 Views | Updated on: May 17, 2024

A terminal illness, often known as a life-limiting illness, is a condition that cannot be cured or adequately treated and is likely to cause the patient’s death. This end-stage disease usually refers to progressive diseases that worsen over time, such as cancer or advanced heart disease. Such diseases affect not only the physical health but also the emotional well-being of both the patient and their family. Frequent doctor consultations, hospital visits, medication, operations, and other expenses can cause a lot of financial strain. Even if you have life insurance, the impact of a terminal disease can be significant and has the potential to drain your savings considerably.

There are a lot of insurance companies that include terminal illness benefits in their policies. However, you can always add it as an extra rider to your base plan if they don’t. Since this option is available, an increasing number of people (particularly in metropolitan areas) are adding terminal illness insurance as a rider to their current life insurance plans because the additional coverage is a definite advantage.

Know What Is a Rider In Insurance Plan?

The question of what is rider in insurance plan can be confusing for some. Put simply, a rider is a supplement to the basic insurance that adds additional coverage and benefits to your existing policy. Life insurance companies provide a variety of riders that you can purchase for an additional premium cost (as per your requirements). A terminal illness insurance rider can also be added similarly.

Understand What Is Terminal Illness Insurance Cover?

A terminal illness cover is a life insurance plan with a terminal illness rider. It covers a specific list of life-threatening diseases as per the insurance company’s policy. Terminal illness insurance is identical to life insurance, except instead of a death benefit, you receive tax-free payments as benefits of riders in insurance. If the unexpected occurs and you are diagnosed with a terminal disease, a rider benefit availed under policy will grant a lump sum payment that you may use to cover any expenditures.

Benefits of Terminal Illness Rider

If the insured is given a survival period of 12 months, the terminal illness benefits include giving the life insurance lump sum amount early. It is generally offered as part of a life insurance policy at no additional cost. In addition to this guaranteed payout, terminal illness insurance has several other advantages.

  • Do Away with Additional Premium Costs for Increased Coverage
  • A life insurance policy with a terminal disease rider provides excellent coverage at affordable premium charges. If you have a terminal disease, it is usually better to cover a terminal illness with your base plan rather than a separate health coverage plan.

  • Treatment Costs
  • As part of the benefits of riders in insurance, policyholders can get at least 25% of the sum assured for treatment if they have a terminal disease.

  • Double Tax Advantages
  • Apart from providing financial security in a terminal illness or other unforeseen events, combining a terminal illness rider with a life insurance policy can give dual tax benefits. This is because the insurance premiums paid for both covers are eligible for exemption under sections 80C and 80D of the Income Tax Act, 1961.

It is always better to be safe than sorry, and this thought itself necessitates purchasing terminal illness insurance. Therefore, to protect your loved ones and yourself from the harsh realities of life, avail benefits of riders in insurance plans and get yourself the cover you need.

- A Consumer Education Initiative series by Kotak Life

Amit Raje
Written By :
Amit Raje

Amit Raje is an experienced marketer who has worked in various Fintechs and leading Financial companies in India. With focused experience in Digital, Amit has pioneered multiple digital commerce in India. Now, close to two decades later, he is the vice president and head of the D2C business department. He masters the skill of strategic management, also being certified in it from IIMA. He has challenged his challenges and contributed his efforts in this journey of digital transformation.

Amit Raje
Reviewed By :
Prasad Pimple

Prasad Pimple has a decade-long experience in the Life insurance sector and as EVP, Kotak Life heads Digital Business. He is responsible for developing user friendly product journeys, creating consumer awareness and helping consumers in identifying need for life insurance solutions. He has 20+ years of experience in creating and building business verticals across Insurance, Telecom and Banking sectors

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