Most people who have opted for Term Insurance are aware of terms such as terminal illness benefit and critical illness benefit. However, they often fail to understand them or even know the difference between the two. Some even consider both benefits to be the same while assuming that they are covered for both. Through this article, we aim to help you better understand the terminal illness benefit, and bridge the gap between the two.
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What is terminal illness?
Before we delve into the topic of terminal illness benefit, it is important to understand the term ‘terminal illness’. A terminal illness is a medical condition that is not treatable or curable. The person who is diagnosed with a terminal illness is expected to die within a short period of time. Due to their low life expectancy, they usually resort to palliative care.
Most Term Insurance policies feature the terminal illness benefit. As a policyholder, if you’re diagnosed with a terminal illness, then the insurer will pay an amount equal to 25% of the sum insured to you. Once you make the claim, you’ll no longer have to pay premiums. Also, once the insurer pays you, an equivalent amount is reduced from the death benefit offered in the policy.
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How does a critical illness cover differ from a terminal illness cover?
Quite simple! The critical illness cover is basically a rider that can be bought separately along with your insurance. This cover is used for the treatment of any critical illness, such as cancer, heart attack, or stroke. The covered illnesses are fixed and will be conveyed to you when you opt for a critical illness cover.
Although the chances of becoming terminally ill are fairly slim, it is wise to opt for the terminal illness benefit in your Term Insurance policy. The reason? Terminally ill individuals require medical treatment as long as they are alive. In addition to the treatment costs, the insured and their families will need enough financial support for their daily expenses. Opting for the terminal illness benefit while taking out an insurance policy will help ease the financial burden in such situations by at least paying for medical care.
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While choosing your cover, do not ignore the necessary costs related to terminal illness. If you are diagnosed with a terminal illness, remember that apart from palliative care costs, you will have to take care of other costs such as household expenses, lifestyle expenses, EMIs, and children’s education expenses. In case, you are unable to calculate the value of these expenses, you must consult a reputed financial planner to help you with it.
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So, what are the conditions under which you can claim terminal illness benefits? Though these may vary from insurer to insurer and product to product, here are a few common ones.
- You can claim the benefits if you have been diagnosed with a terminal illness and your expected lifespan is less than 6 months.
- You are eligible for the terminal illness benefit only if you have been diagnosed within the term of the policy. On top of this, your diagnosis must be confirmed by two doctors – a specialist and a company physician.
- The benefit provided can be used only for the palliative care.
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Well, there you have it. We hope this article proves to be useful when it comes to opting for a terminal illness cover when taking out a Term Insurance policy of your own.