What is a Terminal Illness Rider and why do I need it?

As you know, when you buy term insurance, your nominee will get the policy money only after you pass away during the policy duration.
 

But what if you are unfortunately diagnosed with a terminal illness during the policy duration?
 

• How can you afford your treatment? 

• What about the cost of your palliative care?

The Terminal Illness rider will provide financial assistance to you and your family in this case by ensuring you and your family get the term policy payout immediately upon the diagnosis of your life-threatening illness and not after your death during the policy duration.

The Terminal Illness rider ensures your family has immediate access to the insurance money as soon as you’re diagnosed with a life-threatening illness.
 

Let’s understand with an example:

With a life cover of ₹ 1 crore and a Terminal Illness rider, you get ₹ 1 crore immediately upon the diagnosis of a life-threatening illness.

So, you should buy a Terminal Illness rider if you want to:

• Cover the cost of treatment/palliative care

• Help your family plan the best use of the insurance money while you are still around

If you are eligible to buy term insurance, then you are eligible to buy the Terminal Illness rider.

You’ll be happy to know that the Terminal Illness rider comes at a very low or no extra cost.

In fact, some insurers may even include it within your base term policy aka as a feature of your plan.

You can opt for the Terminal Illness rider when applying for a term plan from a life insurance company of your choice.

The final process will, of course, vary from insurer to insurer. 
 

You can also buy this rider on your policy anniversary date.

Good news! The Terminal Illness rider will cover you for the entire duration of your term plan.

Yes, you can.

But you can only do it on the date of your policy anniversary. 

No.

The Terminal Illness rider is an Accelerated rider which means, you will get only your original life cover amount and no additional amount.

But you will receive the insurance money early, before the policy duration is over.

Some of the exclusions in this rider are: 
 

• Pre-existing disease

• Congenital Infection

• Participation in war, riots or rebellion activities

• Attempt to suicide or self-inflected injuries

• Participation in criminal activities and/or dangerous activities 

Speak to your insurer to check the complete list of rider exemptions. 

Yes. The premiums you pay for this plan are exempted from tax under Section 80C and 80D of the Income Tax Act, 1961.