The critical illness rider is an add-on coverage that could be added to life insurance plans in India. It provides additional financial protection by paying out a lump sum benefit for the policyholder if they are diagnosed with a serious illness covered by the life insurance rider.
However, before adding the critical illness insurance rider to your life insurance policy, there are several essential things you need to know to ensure you fully get how it works and how it can be advantageous to you. This article will discuss the top five things you need to know about this rider.
Additional protection against diseases
A critical illness rider is an add-on policy that covers significant diseases such as cancer, heart attack, and much more, depending on the rider’s coverage. These diseases can significantly impact an individual’s health and financial well-being, so having a critical illness rider can be a wise decision.
Cancer, for instance, can be an expensive disease to treat, and the costs can quickly increase. Critical illness riders can help cover the costs of medical treatments, including chemotherapy and radiation therapy, and other expenses like transportation and home care. A critical illness rider can help cover the cost of hospitalization, medications, and rehabilitation.
Payout flexibility with cover for expenses
A critical illness insurance plan allows you to use the payouts according to your preferences. In addition, it provides coverage for expenses that a standard health insurance policy, including copays, deductibles, out-of-pocket expenses, and experimental treatments, may not cover.
These benefits make the critical illness cover policy a valuable investment for anyone seeking additional financial protection for major illnesses. With this type of insurance, individuals can have peace of mind knowing that they have the financial resources to cover the costs of their medical treatments, regardless of the costs.
Therefore, purchasing critical illness insurance can be a wise decision to ensure adequate financial support during a challenging time.
Income replacement
Life insurance riders, such as critical illness cover, can be a valuable source of income replacement during illness. When individuals cannot work due to a critical illness, they may experience a loss of income, making it challenging to keep up with everyday living expenses.
Critical illness insurance or the rider can help alleviate this financial burden by providing a lump sum that can be used to cover loan repayments, rent, utility bills, childcare, and other essential living expenses.
Tax benefits
Critical illness life insurance riders provide tax benefits to policyholders. Under Section 80D of the Income Tax Act, one can claim tax deductions on the premium paid on the rider.
The benefits also extend to the lump-sum payout received by policyholders, which is tax-free. So, with critical illness insurance, not only do you receive financial protection against critical illnesses, but you also enjoy tax benefits and peace of mind.
Tata AIA Life Insurance plans and their critical illness rider offers these tax benefits, as per the prevailing tax laws.
Cashless hospitalization benefits
One of the important benefits of critical illness insurance is that it is a lump-sum payment upon diagnosis of a covered critical illness. Hence, there is no need to provide hospitalization bills or proof of treatment to claim the benefit; only the proof of the diagnosis will suffice.
This means that policyholders can use the money as they see fit, such as to pay for medical expenses, make up for lost income due to the illness, or recuperation. This feature of critical illness insurance can be especially beneficial when the illness is not severe enough to warrant hospitalization.
By not requiring hospitalization or bill submission, critical illness insurance provides a hassle-free and straightforward way to access financial protection when you need it the most.
Riders have a waiting period
Understanding that some critical illness insurance policy riders have waiting periods before the policy benefits become effective is essential. During this period, typically 30 days to two years, policyholders may not be eligible for coverage for specific critical illnesses.
This means that if a policyholder is diagnosed with a critical illness during the waiting period, they may not receive the full policy benefits or any benefits, depending on the policy terms and conditions.
Waiting periods may vary depending on the insurance provider and policy type, so choosing a policy with a waiting period that aligns with your health needs and financial situation is essential.
Conclusion
The critical illness rider is an add-on coverage that provides additional financial protection by paying out a lump sum benefit for the policyholder if they are diagnosed with a serious illness covered by the rider. It covers major diseases and provides payout flexibility for expenses, income replacement, tax benefits, and hassle-free claim benefits.
Adding a critical illness rider to your life insurance policy can provide essential financial protection and peace of mind during challenging times.
