Terminal Illness in Term Insurance
  • Understand Terminal Illness Cover
  • Terminal Illness Benefits
  • Terminal vs Critical Illnesses
Terminal Illness in Term Insurance
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Sahil Singh Kathait
Written By:
Sahil

Sahil Singh Kathait

Health & Term Insurance

A boy-in-squares bagging escapades of switching streets in groove & sensing musical airy-notes from 6 1". Under wayed nyctophile sketching the walls of life from the panorama of anime.

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Reviewed By:
Priya Singh

Priya Singh

Health, Life & Term Insurance

Priya has been in the content writing industry for over 9 years. She has been religiously following the insurance sector since the start of her career which makes her an avid insurance expert. Her forte lies in health, term, and life insurance writing, along with her knowledge of the latest developments in the insurance sector.

Updated on Jan 11, 2024 5 min read

Himanshu Kumar

Himanshu Kumar

Term Insurance, Content Writer

Content Manager with heart, mind, and soul dedicated to creating impactful content that exceeds the market standard, delivers and reaches the readers conveniently. Besides producing high-ranking content, my focus lies in creating content that solves user queries and adds value.

Himanshu Kumar

Written By: Himanshu Kumar

Updated on Jan 15, 2025

Himanshu Kumar

Anchita Bhattacharyya

Term Insurance, Content Manager

Content Manager with heart, mind, and soul dedicated to creating impactful content that exceeds the market standard, delivers and reaches the readers conveniently. Besides producing high-ranking content, my focus lies in creating content that solves user queries and adds value.

Reviewed By: Anchita Bhattacharyya

15 min read

Rhishabh Garg
Written By: Rhishabh Garg
Rhishabh Garg
Rhishabh Garg Term Insurance Head
Rhishabh Garg is the Business Unit Head of Term Insurance at Policybazaar.com. He has over 10 years of experience and currently plays a crucial role in shaping the future of term insurance in the company. Rhishabh also has experience in customer services and crafts new strategies for organizational success, one of which is Policybazaar’s claim assistance program.
Santosh Agrawal
Reviewed By: Santosh Agrawal
Santosh Agrawal
Santosh AgrawalChief Business Officer
Santosh Agarwal is the Chief Business Officer of life Insurance at Policybazaar.com and has over a decade of experience in the insurance domain. She has helped shape Policybazaar's life insurance vertical and ensures the effective execution of the company's overall strategy. Santosh is also responsible for the Term Insurance for Women domain at Policybazaar.com and educates the masses about its importance and benefits.

Terminal Illness Coverage in Term Insurance

Terminal Illness is a life-threatening disease that cannot be fully treated and leads to the patient’s death. Diseases like cancer, motor neurone disease (MND), advanced heart disease, neurological diseases, lung disease, etc. fall into the category of terminal illnesses.

In case there's a higher chance of you getting terminally ill in future, and your family's medical history shows that multiple members are affected due to a critical illness, then the terminal illness insurance cover is highly recommended for you. You can add this add-on rider to your base plan or purchase a term plan with an in-built terminal illness benefit and claim an early payout of death benefit if you are diagnosed with one of the listed terminal illnesses.

What is a Terminal Illness Benefit?

It becomes expensive to get treatment for terminal illnesses and may lead to the patient's family being in a financial crisis. So, it's necessary to buy a term insurance policy with a terminal illness benefit or a rider where the insured person can claim the death benefit while they're still alive.

Still, their nominee gets the death benefit after their demise minus the terminal illness claim amount. Some insurance providers offer up to 25% of the life cover to policyholders in case their expectancy is assumed to be less than 12 months only.

Benefits of Buying Terminal Illness Cover in Term Insurance Plan

Terminal Illness rider and accelerated death benefit rider come with plenty of benefits that help an insured person suffering from a terminal disease financially.

Here, we've listed the top 5 benefits of terminal illness cover that can benefit you throughout the policy tenure.

  1. Flexibility to claim some part of life cover

    The rider gives you the flexibility to claim a tax-free lump sum amount from life cover in case of the diagnosis of a terminal illness.

  2. Additional life cover at low premium rates

    Terminal illness benefits also come as add-on riders in term insurance plans. Sometimes, it is built within the base plan, or you can purchase it in exchange for additional premiums. However, it may cost you up to around Rs. 400 to Rs. 500 monthly and get an additional life cover with extra protection against terminal illness.

  3. Flexibility to use terminal illness insurance cover

    You can use the terminal illness insurance coverage to pay the medical and hospital expenses until the end stage of treatment. It helps an insured person go through medical treatment without worrying about their financial situation.

  4. Tax Benefits

    Terminal illness rider in a term insurance plan comes with double tax benefits. Under sections 80C and 80D of the Income Tax Act, 1961, the premium you pay towards terminal illness benefits is tax-deductible, which means the premium can be used to reduce your tax outgoing on an annual basis.

Difference Between Terminal Illness vs Critical Illness Benefit in Insurance

People always make the misconception that both these are the same. So here we've listed the short distinction between Terminal Illness and Critical Illness in term insurance.

Terminal Illness Critical Illness
Terminal illnesses cannot be treated completely and eventually lead to death. Extensive treatment helps ease symptoms or gives you extra time to spend with your loved ones. Critical illnesses can be treated completely by getting extensive medical treatment to normalize health conditions and save life.
The life expectancy for terminal illness is low, and it may eventually lead to death. Critical illness can be cured, and there are high chances of recovery with better medical treatment.
You can claim a terminal illness insurance benefit when diagnosed with a qualifying terminal illness. Please note that claim is only accepted if your life expectancy is only 12 months to 24 months. You can claim a critical illness insurance benefit when diagnosed with a qualifying critical illness. This benefit does not consider the life expectancy of the policyholder. It only takes into account the survival period of 30 days and diagnosis reports.
Under terminal illness insurance, you might get up to 25% to 50% of the death benefit as a terminal illness benefit to pay the medical expenses. However, the remaining life cover will be delivered to the beneficiaries as a death payout. Under critical illness insurance, you can claim a tax-free lump sum amount from life cover in case of the diagnosis of a critical illness. You can use the benefit payout to pay the medical and hospitalization expenses.
It can be added as a rider to the policy or a critical illness term policy can be bought. It can be added as a rider to the policy or comes as an in-built cover in the term insurance plans.

Conclusion

Terminal illness feature with a term insurance plan is an ideal option for those who have a higher chance of getting terminal illnesses in future. Some insurance providers offer terminal illness benefits in a base plan, or you can get this benefit as a rider attached to the base term plan in exchange for additional premiums. These added benefits make sure that you should always stay protected against life threatening diseases.

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Terminal Illness in Term Insurance: FAQs

1. What is considered a terminal illness for insurance?

Terminal illness is a condition that cannot be treated and likely lead to someone death.

2. What is the terminal illness benefit of term insurance?

The terminal illness benefit gives you the flexibility to claim a tax-free lump sum amount from life cover in case of the diagnosis of a terminal illness.

3. How does terminal illness benefit help us?

The terminal illness benefit rider goes into effect if your medical reports state that your life expectancy is fewer than 12 to 24 months. After the diagnosis, it pays a lump sum amount from your sum assured.

4. What are examples of terminal illnesses?

The terminal illness benefit rider provides protection against life-threatening diseases like cancer, motor neurone disease (MND), advanced heart disease, neurological diseases, lung disease, Etc.

5. Why should I buy a terminal illness cover?

If you have a family history of critical or terminal illnesses, work in conditions that can lead to a life-threatening disease or have a recurring health issue then you can consider buying a term plan with a terminal illness benefit or rider.

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Sahil Singh Kathait

Written By: Sahil Singh Kathait

A boy-in-squares bagging escapades of switching streets in groove & sensing musical airy-notes from 6 1". Under wayed nyctophile sketching the walls of life from the panorama of anime.

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