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Does term insurance cover terminal illnesses?

Meena’s father had died when Meena had been aged 10 years old. Her maternal uncle had so far taken care of all of Meena and her mother’s financial assets, resources and matters. He was the one who had invested in term insurance for both of them, along with individual plans for his own family. Does Term insurance has other benefits?

However, when his wife was diagnosed with ovarian cancer, it was a rude shock for the entire family to learn that her treatment would not be covered under the term insurance. Having learned about terminal illness in term insurance covers in this manner, Meena made extra certain about availing the cover when she first invested in term insurance for herself and her mother.

What is Term Insurance?

Term insurance policies are a blanket cover that offer death benefits to the dependents, on the death of the insured person. Additionally, some term insurance policies also offer an income benefit, which provides a fixed income to the dependents for a fixed period of time after the insured person’s death.

However, terminal illness in term insurance is an additional cover provided by several insurers, which allows for the lump sum payment in case the insured person is diagnosed with a terminal illness. Terminal diseases including cardiovascular issues, Alzheimer’s disease, cancer, etc. are all on the rise today and it is essential for people to opt for terminal illness in term insurance cover. Read on to learn the benefits of opting for terminal illness in term insurance cover, which provides coverage against terminal illnesses as an add-on.

High-Cost Issue


Medical costs in India have risen significantly over the last few years and continue to rise led by inflation in healthcare and related sectors. As a result, the treatment of a critical illness can prove to be a major setback financially for the entire family. It may require dipping into savings that are being compounded for a different purpose entirely. However, investing in a terminal illness in term insurance policy provides coverage against such situations. A lump-sum payment is made by the insurer at the time of diagnosis which can significantly bring down the costs incurred for medication, hospitalization, and even surgery if required.

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1. No Need To Dip Into Savings

Acts as an Income Replacement:
A terminal or critical illness can be debilitating to the extent that the patient is unable to return to full-time employment for a substantial amount of time. At such times, terminal illness in term insurance cover proves especially useful, specifically if it has an income benefit cover add-on too. The income benefit provides a fixed income to the insured for a certain period, which allows them to generate income in their postoperative period. The amount is usually a percentage of the sum assured, as determined by the insurer.

2. Acts as an Income Replacement:

A terminal or critical illness can be debilitating to the extent that the patient is unable to return to full-time employment for a substantial amount of time. At such times, a terminal illness in term insurance cover proves especially useful, specifically if it has an income benefit cover add-on too. The income benefit provides a fixed income to the insured for a certain period, which allows them to generate income in their postoperative period. The amount is usually a percentage of the sum assured, as determined by the insurer.

3. Dual Tax Benefits:

Both the premiums paid for term insurance and for the terminal illness in term insurance cover are eligible for tax deductions under the Income Tax Act, 1961. Under Section 80C, the overall deduction limit is fixed at Rs. 1.5lakh and under Section 80D, it is fixed at Rs. 25,000.

4. Allows for the Best Treatment:

  1. In many cases, patients do not avail of the best treatment available to them owing to the associated medical costs. Especially with the rising costs of medicine and hospitalization, patients are more prone to being treated in a manner where costs of treatment can be kept as low as possible. This is another area where a terminal illness in term insurance cover can prove quite useful. Since it provides a lumpsum amount at the time of diagnosis, it is possible for patients and their families to explore the best possible treatment options before settling on a decision.
  2. The insured persons can also get themselves treated at medical facilities located in foreign countries if they so wish. Several countries have outrun India in terms of treatment, and it is best for patients with terminal diseases to seek the best treatment possible. In such cases, a terminal illness in term insurance cover offers a whole new avenue of possibilities for patients and their families.
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A term insurance is a plan that offers a death benefit as well as an income benefit for the family of the insured.

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