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Terminal Illness Rider in Insurance

TeamAckoNov 2, 2023

In today's uncertain world, it's not uncommon to receive a terminal illness diagnosis out of the blue. Along with the emotional turmoil that comes with it, families are also left with the daunting task of handling the medical bills that come with the necessary care. That's where term insurance with a Terminal Illness Rider can come in handy. This type of policy not only provides financial security in the event of an unexpected illness, but it also offers extra financial support specifically for terminal illnesses. In this article, we'll take a closer look at what a Terminal Illness Rider is, how it works, and what benefits it can offer to individuals and families facing this difficult situation.

Terminal Illness Rider in Insurance



What is a Term Life Insurance Plan?

A term life insurance policy provides coverage for a fixed duration, commonly known as the "term" of the policy. If the policyholder passes away within this term, their beneficiaries will receive a death benefit payout. After the term ends, the policyholder has the option to renew the policy or allow it to expire.

When a policyholder passes away, an insurance policy serves as a contract that provides a payout to one or more beneficiaries. This monetary support is offered by the insurance company to aid the family members of the deceased policyholder.

There are many insurance providers that offer Term Insurance Plans, which can be compared online to find the best one. It's also possible to visit the insurer in person.

Individuals or families can easily purchase Term Insurance online, with the option to cover one person or multiple individuals.

What is meant by a terminal illness?

By definition, a terminal illness is one with a prognosis of only a few years at most. A terminal sickness is a life-threatening medical disease that cannot be cured. Below are a few examples of fatal diseases.

  • Alzheimer's and Parkinson's (two of the many forms of dementia), lung disorders, advanced cancer stages, tumours, and other conditions are terminal illnesses.

  • Fatal heart diseases encompass strokes, heart attacks, and Type-2 Diabetes.

Insurance for terminal diseases can help the patient and their loved ones cope financially with a diagnosis like this by covering the high expense of medical care.

Differences in critical illness and terminal illness

While both Critical Illness and Terminal Illness can be devastating, there are important distinctions between the two. Let’s take a quick look at the differences.




Serious health conditions that can be life-threatening or disabling.

Illness that is expected to lead to death within a year.


Life can be prolonged with medical treatment and management.

Death is imminent despite medical treatment.

Signs of illness

Symptoms are often sudden and severe, with potential for organ failure.

Excruciating and ongoing suffering Symptoms include extreme Tiredness Nausea Vomiting Constipation Anxiety Depression Breathing difficulties


Kidney failure, bypass surgery, organ transplant, multiple sclerosis, and similar conditions are all critical illnesses that fall under this umbrella.

Advanced cancer, Alzheimer’s disease, HIV/AIDS, Parkinson’s disease

What is a Term Insurance Terminal Illness Rider?

An insurance rider is a type of coverage that provides extra protection and benefits beyond what's included in the primary policy. One such rider is the Terminal Illness Rider, which can offer significant financial relief if the insured is diagnosed with a terminal disease. If the insured is diagnosed with a terminal condition within the policy's coverage period, they will receive the full sum of the rider. 

However, it's important to note that this benefit is only paid out if the insured informs their insurance company of the diagnosis within three months or according to the terms and conditions of the insurer. Once the benefit is paid out, the insured is no longer eligible for coverage under the Terminal Illness Rider.

How does the Terminal Illness Rider work?

If you have this rider, you can receive a portion of the insurance payout that your family would get if you pass away from a serious illness. This provides you and your loved ones financial security for a long time – known as Accelerated Death Benefit or Living Benefit. Your provider will determine the exact amount of your death benefit, but it will typically be a fraction of the total death benefit.

The coverage these riders provide is distinct from that provided by Critical Illness Riders. When you or a loved one are at a stage where recovery is extremely doubtful, Terminal Illness Insurance can provide financial protection. There is an additional premium to consider, but its peace of mind may be worth it.

Benefits of a Terminal Illness Rider in a Term Insurance Policy

If you're healthy, you're a good candidate for term life insurance. But if you are already diagnosed with terminal illness, it can be harder to get coverage. Health insurance doesn't always cover all the medical conditions, so some people add Terminal Illness Protection to their Term Insurance Policy. Here are three reasons to consider adding this protection to your term life insurance policy.

  • Designed to substitute for lost wages

Adding a rider for terminal disease to a term insurance policy can provide financial security in case of unforeseeable events. This rider can also cover normal medical testing and protect against out-of-pocket medical costs. Some term insurance policies even include a Return of Premium (ROP) feature.

  • Safeguards against potentially fatal medical emergencies

If you have term life insurance but no Terminal Illness Rider, your beneficiaries will only get the death benefit of the term plan. In case of the policyholder's death or serious illness, this protection will provide a financial safety net to help with unexpected medical expenses and replace lost income.

  • Guaranteed higher payouts at very inexpensive premiums

Term Insurance policies with Terminal Illness Benefits provide complete coverage at affordable rates, unlike traditional medical policies that raise premiums at the end of each term. This is because treating a terminal illness can cost around Rs.20 Lakhs on average for treatment. Additionally, fewer people have life insurance policies that cover terminal illnesses compared to common medical issues.

Why is the Terminal Illness Rider Necessary?

Medical treatment costs have skyrocketed in the country in recent years, and medical expenses related to hospitalisation and treatment of a terminal illness can become a burden on the individual and their family members. The Terminal Illness Rider provides financial protection to the insurer in the event of being diagnosed with a terminal illness.

Frequently Asked Questions

Below are some of the frequently asked questions on Terminal Illness Rider in Insurance


Do I need to have a medical exam to add a Terminal Illness Rider to my life insurance policy?

No, typically you do not need to have a medical exam to add this rider to your life insurance policy. However, some insurers may require you to take a medical exam to buy a Term Life Insurance Policy. 

Could I buy a Terminal Illness Rider as a standalone policy, apart from my life insurance coverage?

No, it is an add-on to a life insurance policy and cannot be purchased separately.

Is there an additional cost to add a Terminal Illness Rider to my life insurance policy?

Yes, there may be an additional cost to add this rider to your life insurance policy. The cost will depend on the insurer and the specifics of your policy.

How is the benefit paid out if I am diagnosed with a terminal illness?

The benefit is typically paid out in a lump sum and can be used in any way you choose. This can include paying for medical expenses, living expenses, or other costs associated with your illness.

Disclaimer: The content on this page is generic and shared only for informational and explanatory purposes. It is based on industry experience and several secondary sources on the internet, and is subject to changes.


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