If you are about to get a term insurance policy, then chances are that your insurance company has suggested you to get a critical illness rider. But should you really get this rider? Would adding such a rider be of much help apart from increasing the premium amount? Read on to find the answers!
What exactly is a critical illness rider?
A rider is a provision under a term insurance policy that lets you add more benefits to a basic policy to get extra coverage. A critical illness rider offers additional financial aid during the time of a critical illness of the policyholder that makes him/her unable to work. A critical illness not only means major financial pressure on the family but also makes the person unable to work and earn monthly wages. This rider comes in handy at this crucial point in life.
What are the benefits of a critical illness rider in a term insurance policy?
One of the main reasons why you need to add a critical illness rider tocalculate term insurance premium is because of all the benefits it offers, such as:
- It offers coverage for almost all the major illnesses like Kidney Failure, Stroke, Paralysis, Cancer, Heart Attack, Organ Transplant (Pancreas, Kidney, Heart), and Coronary Artery Bypass Surgery.
- The benefits from the rider can act as a way to replace your income when a critical illness makes you unable to work.
- As per Section 80C of the Income Tax Act, 1961, the premiums paid for a term insurance plan get tax exemption up to ₹1.5 lakh. When you add the critical illness rider, you also get tax exemptions under Section 80D.
- When you add the critical illness rider, your insurance premium increases by a minimal amount. However, the benefits that you get increase manifold.
- The added coverage from the critical illness rider can help you take care of the daily and medical expenditure.
How does it work?
With the critical illness rider, the policyholder gets a lump sum amount when they are diagnosed with any critical illness that is mentioned in the policy. After the detection of the critical illness, if the policyholder makes a claim under this rider, then it reduces the policy coverage. The insured is allowed to use the money for any purpose – right from paying the medical bills to meeting the day-to-day expenses. There is no need to show any evidence that the money has been used only for hospitalization or medical reasons.
The most important thing to check before you get a critical illness rider is the names of diseases listed under the policy. Apart from the major critical diseases, some policies might even include lifestyle diseases. So, it is better to check the inclusions before signing the dotted line.
That’s all! If you are getting a term plan, then make sure you add the critical illness rider to it. It will help in enhancing your term plan even further.
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