What Is Terminal Illness Cover In Term Insurance?

by SMCIB on Saturday, 27 April 2024

What Is Terminal Illness Cover In Term Insurance?

In a world where life can take unexpected turns, term insurance offers a reassuring shield of financial protection. It is the safety guard that ensures your loved ones will not be left struggling if something happens to you. Among the many risks term insurance covers, one crucial aspect is terminal illness.

Terminal illness can strike without warning, turning lives upside down. It brings not just emotional turmoil but also financial challenges for families. Terminal illness cover in term insurance provides a crucial lifeline, offering financial support precisely when it is needed most. This allows individuals to focus on what truly matters – their health and well-being. Let's delve deeper into this important cover of term insurance to safeguard yourself and your loved ones.

What Is Terminal Illness?

Terminal illness, also known as end-stage disease, is a medical condition that medical professionals determine cannot be cured or treated, ultimately leading to the patient's death. Those diagnosed with a terminal illness typically have a limited life expectancy, usually around 6 months to a year, with little to no chance of improvement. Examples of terminal illnesses include advanced-stage cancer, heart disease, lung disease, liver disease, motor neuron disease, neurological disease, dementia, stroke, HIV/AIDS, etc.

It is important to distinguish between terminal illness and critical illness. While some critical illnesses can be treated and potentially cured with timely intervention, terminal illnesses have a higher certainty of being fatal, with slim chances of survival. Neglecting timely treatment for critical illnesses can escalate into terminal conditions.

Terminal Illness vs Critical Illness: What is The Difference?


Terminal Illness

Critical Illness


This refers to a medical condition that is incurable and ultimately leads to death.

This refers to a medical condition that poses an immediate threat to a person's life or health. While it can be life-threatening and require urgent medical intervention, it may not necessarily be terminal.


A terminal illness usually has a poor prognosis, and there is no chance of recovery.

A critical illness might not have a good prognosis, but there is still a chance to get better with the right treatment.

Treatment Focus

Treatment aims to make symptoms better and enhance quality of life instead of curing the illness.

The treatment prioritizes swift medical action aimed at stabilizing the patient and preventing any worsening of their condition.


End-stage cancer, severe heart failure.

Heart attack, stroke, organ transplant, serious injury.

What Is Terminal Illness Rider In Term Insurance?

The terminal illness rider is an extra feature you can include in the term insurance plan for an additional cost. It is like a safety shield that comes into play when you or your family encounter a particular financial challenge. Term insurance already offers various optional benefits, or riders, such as coverage for critical illness, accidental disability, hospital care, etc., and the terminal illness rider is one of these options.

This rider provides financial support when you need it most, during a difficult time. It gives you some financial relief when facing a serious illness, helping you and your loved ones manage the costs associated with it.

How Does Terminal Illness Benefit Work In Term Insurance?

The terminal illness benefit in term insurance operates like this –

Firstly, if you are diagnosed with a terminal illness, this benefit allows you to receive a part of your insurance coverage upfront while you are still alive. However, keep in mind that this upfront sum will be deducted from the total amount that your loved ones would receive upon your passing.

After your demise, the remaining portion of the insurance coverage will be given to your family or beneficiaries. The insurance company will determine the exact amount they receive, but typically, it is a portion of the total coverage. The main purpose of this benefit is to provide financial support during a tough time. It is designed to help cover expenses like medical bills and other costs associated with your illness.

Is Accelerated Terminal Illness Benefit Same As Terminal Illness Benefit?

The accelerated terminal illness benefit, also known as the accelerated death benefit or living benefit rider, operates similarly to the terminal illness benefit. Here's how it works –

To trigger this benefit –

  • Firstly, you will need written confirmation from a qualified doctor in the relevant field stating that you have a terminal illness and a shorter life expectancy.
  • Once you have this confirmation, it is crucial to inform your insurance provider promptly, following the terms and conditions of your policy.
  • The insurer might verify the terminal illness certificate internally, possibly consulting their team of medical experts to confirm the diagnosis.
  • Upon validation, the insurance company will make the term insurance payout to you while you are still alive.

Who Qualifies For Terminal Illness Benefits?

Eligibility for this benefit hinges on the rules laid out in your insurance policy. Usually, individuals diagnosed with a terminal illness are eligible. A terminal illness is one that cannot be cured and is likely to result in death. However, it is crucial to meet the specific criteria outlined by your insurance provider.

To access this benefit, you must also follow the terms and conditions specified in your policy. This ensures that the process runs smoothly and you can receive the support you need during such a challenging time.

Importance Of Terminal Illness In Term Insurance

Here are the benefits of a terminal illness rider in a term insurance policy –

  • Access To Advance Payout
    One crucial benefit of having a terminal illness rider in your term insurance policy is the ability to access a portion of your death benefit in advance. Unlike term insurance plans without this rider, this early payout can be incredibly helpful if you are diagnosed with a terminal illness.
  • Financial Security For Your Family
    When faced with a terminal illness, earning income and managing family expenses becomes challenging. The early payout from the terminal illness rider acts as a replacement for your earned income, ensuring that your loved ones’ financial needs are taken care of even if you are no longer able to provide for them. This support helps them maintain their lifestyle and fulfil their dreams without any compromises.
  • Relief From Financial Burden
    A terminal illness diagnosis often brings along significant financial burdens. From medical treatments to medications and other expenses, the costs can add up quickly. The terminal illness rider offers relief by providing access to a lump-sum payment. This money can be utilised to cover medical bills, arrange for in-home care, or address any other urgent financial needs, easing the strain on you and your family during a challenging time.
  • Unrestricted Funds
    Another significant advantage of the terminal illness rider is the freedom it offers regarding fund usage. The money you receive isn't tied to specific expenses, giving you the flexibility to use it as per your needs. Whether it is for medical bills, day-to-day expenses, creating special memories with your family, or any other purpose, you have the freedom to decide.
  • Preservation Of Savings
    By accessing funds through the terminal illness rider, you can safeguard your personal savings and assets. This infusion of cash from your term insurance policy helps avoid the necessity of selling investments or assets to cover immediate expenses. By preserving your savings, your family can maintain financial stability and continue working towards their long-term financial goals, even during challenging times.
  • Peace Of Mind
    Having a terminal illness rider in your term insurance policy brings peace of mind to both you and your loved ones. The assurance that financial assistance is available can alleviate some of the stress that may come with a terminal diagnosis. Knowing that you have support in managing expenses and maintaining financial stability allows you to focus on what truly matters - spending quality time with your family and prioritising your well-being.

Importance Of Early Payout On Terminal Insurance Cover

Listed below are a few reasons why the early payout on terminal illness is of significant importance for individuals facing a terminal illness –

  • Immediate Financial Support
    When someone receives a terminal illness diagnosis, it often comes with hefty medical bills, loss of income, and other financial challenges. The early payout from terminal illness cover offers immediate financial assistance. This helps individuals manage these expenses without any delay, providing a sense of relief during a difficult time.
  • Enhanced Quality Of Life
    Having access to funds right after diagnosis allows individuals to focus better on improving their quality of life. They can use the money to prioritise their well-being, whether it's pursuing necessary treatments, seeking specialised care, or fulfilling personal wishes.
  • Reduced Stress
    Facing a terminal illness is already overwhelming, and financial concerns can add to the emotional burden. The early payout on terminal illness cover helps alleviate this stress by providing financial security. This gives both the individual and their loved ones peace of mind, letting them focus on what truly matters - making the most of their time together.
  • Flexibility In Usage
    One of the most significant advantages of the early payout is the flexibility it offers in fund usage. Whether it's covering medical expenses, arranging for hospice care, settling debts, or creating cherished memories with family and friends, individuals have the freedom to use the funds as they see fit. This ensures that the money serves their unique needs and priorities during this challenging time.

Overall, the early payout on terminal insurance cover provides invaluable support to individuals facing a terminal diagnosis. It offers financial stability and allows them to maintain their dignity and peace as they navigate this difficult journey.

Can I Make A Claim For The Terminal Illness Benefit If I Purchase My Policy After The Diagnosis Of Illness?

If you buy an insurance policy after being diagnosed with a serious illness, like a terminal illness, whether you can claim the terminal illness benefit depends on the rules set by the insurance company.

Normally, insurance companies need you to be healthy when you apply. They usually do not cover people who are already diagnosed with a terminal illness. So, if you are diagnosed before you buy the policy, you might not be able to get the policy at all. And if you cannot get the policy, you will not be able to claim the terminal illness benefit either.

To Conclude,

A terminal illness in term insurance refers to a severe health condition that is not curable and is expected to result in death within a certain period. If you buy the terminal illness rider along with term insurance and are diagnosed with a terminal illness during the policy term, you may be eligible to receive a portion of the death benefit while you are still alive. This rider can provide financial support during a challenging time, helping you and your loved ones cope with medical expenses and other financial burdens.


Terminal illness, also known as end-stage disease, is a medical condition that doctors say cannot be cured or treated well enough. Unfortunately, it is expected to lead to the patient's death.

With terminal illness cover in term insurance, if you are diagnosed with a terminal illness while your policy is active, you can get part of the money from the death benefit while you are still alive. This can help you deal with the financial challenges of being seriously ill.

Critical illness insurance pays out if you get a specific severe illness or injury that might cause long-term disability or death. Terminal illness insurance, on the other hand, gives benefits when you are diagnosed with an illness that cannot be cured and is likely to lead to your death.

The benefit of terminal illness coverage is that it provides financial help to people with terminal illnesses. It can cover medical costs and comfort them during a tough time.

When you claim terminal illness in term insurance, you might get an early payout of part of the death benefit while you are still alive. This money can help cover medical costs or other financial needs.

Not all term insurance plans let you add a terminal illness rider. But some insurance companies offer this option, so it is a good idea to ask your insurer about it.

The specific terminal illnesses covered in term insurance plans in India can differ between insurance companies. It is best to check with your insurer to know exactly what is included in your policy.

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