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What is Terminal Illness in term insurance?

Terminal Illnesses refer to an incurable situation which will mostly result in death. After the diagnosis of a Terminal Illness, the policyholder receives some percentage of the cover amount and the premiums are waived off.

By: Abhishek Kumbhar | 
Read Time: 2 minutes, 9 seconds | 
Last Updated: 26-07-2022
What is Terminal Illness in term insurance?
There isn't a one-size-fits-all strategy when it comes to insurance. Although the main goal of life insurance is to safeguard your family's financial interests after the demise, there are several variants that can cause confusion. People are often confused between Terminal Illness and Critical Illness riders and use them interchangeably. Let us understand the difference between the two.

What is a Terminal Illness Cover?

Terminal Illnesses refer to incurable diseases. Terminal Illness Rider can be purchased along with your Life Insurance policy. Nowadays, many Life Insurance policies come with an in-built Terminal Illness rider. After the diagnosis of a Terminal Illness, the policyholder receives some percentage of the cover amount and the premiums are waived off. After the death of the policyholder, the nominee receives the cover amount. 

What is a Critical Illness Rider?

Critical illnesses are that type of illness that are very serious but are curable through intensive medical treatment. When a critical illness cover is added to an existing insurance plan, it works out in the following manner - If a person is diagnosed with any of the critical illnesses specified in the policy, the insurer pays a lump sum to the policyholder immediately, irrespective of the policyholder’s life expectancy. The policyholder needs to show proof of hospitalization or provide a medical certificate.

Terminal Illness Rider vs Critical Illness Rider

  Terminal Illness Critical Illness
Sum Assured Under terminal illness insurance, you can claim 25 percent of the sum amount assured if the insured person needs the money for the treatment of terminal illness. Under critical illness insurance, you can avail a lump sum amount and a one-time benefit at the time when you need it most.
Claim Can secure your family members as this policy gives the nominee a huge corpus after your death. With critical illness insurance, you can claim the benefit even if you are not hospitalized.
Financial Benefits Financial benefits can be claimed only when the insured has a terminal illness and their life expectancy is assumed to be less than 12 months. Critical illness insurance policy gives a financial benefit to the policyholders only when they suffer from any critical illness.



Many times we see that people often fall prey to miss-selling activities or are victims of confusion. Knowing the difference between the two will surely help you buy the Best Term Insurance Plan for your needs.
If you want to buy Term Insurance that is tailored for your needs, you can visit MyInsuranceClub. Our trained and certified insurance experts will guide you with all your queries. 

Abhishek Kumbhar
Abhishek Kumbhar is an Insurance Analyst with rich experience in the Finance Industry. With his extensive knowledge and exposure of the Insurance sector, he writes articles to provide insights about different aspects of Insurance.

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