How does critical illness insurance strengthen your term insurance safety net?

Colleagues Preity and Nia often engage in candid conversations during their lunch breaks. Today’s topic: the financial safety net provided by critical illness insurance and how it fortifies their term insurance plans.

Preity, said, Nia, term insurance is like the backbone of our financial security—it ensures our loved ones are taken care of in case anything happens to us. But have you considered the added protection of critical illness insurance?”

Nia, intrigued, responded, “I have heard about it, but how does critical illness insurance strengthen our term insurance safety net?”

Preity began listing the benefits, “Firstly, critical illness insurance pays a lump sum amount on the diagnosis of specified illnesses like cancer, heart attack, or stroke. This amount can be used for treatment expenses, allowing us to focus on recovery without worrying about the financial burden.”

Nia nodded, “That makes sense, but what are some other benefits?”

Preity continued, “Well, critical illness insurance complements term insurance plans by offering separate coverage for illnesses. It acts as a financial cushion, ensuring we have funds for specialised treatments or surgeries that may not be covered by a regular health insurance policy.”

Nia thought for a moment and then asked, “But aren’t health insurance plans enough for medical expenses?”

Preity explained, “While health insurance covers hospitalisation costs, critical illness insurance goes beyond that. It provides a payout even if we don’t spend time in the hospital. Plus, it offers a lump sum amount, giving us flexibility in using the funds for various needs, be it medical bills or daily expenses.”

Nia, realising the significance, said, “So, it’s like having an extra layer of protection, especially when facing a critical illness.”

“Exactly,” Preity affirmed, “And the benefits don’t end there. Critical illness insurance also helps in repaying outstanding loans, ensuring our family isn’t burdened with financial liabilities during a challenging time. Moreover, it acts as income replacement, covering our living expenses if we are unable to work due to the illness.”

Nia was visibly impressed, “That’s quite comprehensive. Are there any tax benefits associated with critical illness insurance?”

Preity said, “Yes, Nia. Premium paid-for illness insurance qualifies for tax deductions as per Section 80D. It is a win-win scenario – tax benefits and financial security.”

As they continued, Preity discussed the benefits of illness insurance –

Treatment expenditures

The lumpsum payout is particularly focused on covering treatment expenditures. From fees of doctors to medication expenses and medical procedures, this financial support ensures individuals can get hold of the necessary medical care without fretting about the financial stress linked with treating a critical illness.

Complementary cover

Unlike a term policy, critical illness policy steps offer a separate coverage layer particularly tailored to manage the financial implications of critical illness. This complementary cover ensures that individuals are safeguarded comprehensively, addressing both mortality risks and financial challenges posed by extreme health conditions.

Lump sum payout

Illness policy provides a considerable lump sum payout instantly on the diagnosis of specified diseases. This lumpsum is a considerable amount that acts as a financial lifeline, offering policyholders with the means to provide the instant challenges posed by the illness.

Financial cushion

During times of illness, individuals often witness not just physical challenges but even considerable financial stress. Illness insurance serves as a financial cushion, removing the burden of medical expenditures and permitting individuals to concentrate on their recovery journey with zero need for fretting about financial constraints.

Income replacement

In cases where a critical illness leads to the inability to work, critical illness insurance acts as income replacement. Covering living expenses during the recovery period helps maintain financial stability for the policyholder and their dependents.

Specialised treatment

Critical illness might need specialised surgeries or treatments that go beyond the scope of constant health insurance. Critical illness policy steps in to cover such specialised treatments, ensuring individuals have the access to best medical interventions with zero compromises owing to financial restrictions.

Beyond hospitalisation

Unlike many policies that concentrate on hospitalisation expenditures, critical illness policy offers cover even if hospitalisation is not needed. This broader scope allows individuals to get financial support for a wide range of healthcare conditions, involving ongoing care and outpatient treatments.

Coverage for organ transplants

Critical illness insurance recognises the financial strain associated with organ transplants. Providing coverage for the expenses related to this complex medical procedure ensures that individuals have the necessary financial support to undergo life-saving organ transplant surgeries.

Flexibility in fund usage

The fund flexibility usage is an essential feature of illness insurance. Policyholders have complete freedom to allocate lump sum payouts depending on their instant needs. Whether it is covering healthcare bills, regular expenditures and other unforeseen expenses, this flexibility allows individuals to manage their finances well during a critical medical crisis.

Loan repayment

Critical illness policy goes beyond healthcare expenditures and extends its support to assist policyholders in repaying the loans. This feature allows individuals and their families to not get burdened with financial liabilities, offering a holistic safety net during testing times.

Tax benefits

Premiums paid for critical illness insurance are eligible for tax deductions under Section 80D of the Income Tax Act. This not only provides financial relief to policyholders but also encourages individuals to invest in their health and well-being.

Child education fund

Recognising the long-term impact of a critical illness on a family’s finances critical illness insurance can be used to secure a child’s education fund. This ensures that educational goals are not compromised, providing financial support for the future of the policyholder’s dependents.

Coverage for various critical illnesses

Various illness insurance policy provides cover for a wide range of critical illnesses, offering comprehensive protection against distinct health risks. This broad cover makes sure that policyholders are prepared for distinct health challenges that might arise.

Daycare procedures

Critical illness insurance acknowledges that not all medical treatments require overnight hospital stays. By covering expenses for daycare procedures, it offers financial support for a range of medical interventions that can be completed within a day.

No claim bonus

A few critical illness insurances incentivise healthy living by providing a no-claim bonus. This reward allows individuals to prioritise their preventive care and well-being, resulting in potential additional advantages in the form of bonuses.

Loss of income protection

Critical illness insurance safeguards against income loss during the period of recovery. This feature is essential in maintaining policyholders’ stability and their family members, particularly when the potential to work is hampered by a critical illness.

Peace of mind

The most significant benefit of critical illness insurance is the peace of mind it provides. Knowing that one is financially prepared for unexpected health challenges allows individuals to focus on their health and well-being, confident that they have a robust financial safety net in place.

Preity exclaimed, “Nia, think of it as having a prudent partner alongside our term insurance. It’s like having Iron Man and Captain America—strong individually, but unstoppable together. Critical illness insurance enhances our financial resilience, ensuring we are prepared for whatever life throws at us.”


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