Term & Critical Illness - Covid-19 Pandemic

The increase in sales of term plans witnessed by the Indian life insurance industry can be attributed largely to the spread of the novel coronavirus. To further boost their healthcare shield against any serious illness, policyholders have been buying critical illness riders along with term plans in the last few months.

Sales of term plans had increased by around 30-40% in the first quarter of the current financial year compared to last year. Sales of critical illness riders have also seen a surge of around 10-20% in the last few months. Queries on critical illness covers have gone up, too, since April. The key reasons for buying the term plan is the fear of ongoing pandemic and increased awareness of insurance.

Term plans are pure protection plans offered by life insurance companies. The insured gets a fixed amount on death and there are no maturity benefits if policyholders survive the policy term. Critical illness riders form the optional cover that gives claims payout on the diagnoses of a disease. Typically, critical illness riders include diseases such as cancer, paralysis, heart attack, lung diseases, among others. Under the critical illness rider, on diagnosis of an acute illness, the policyholder is provided with a lump sum benefit by insurance companies.

Policyholders should take a careful look at the diseases mentioned that it covers, at what stage insurers will pay the money and the premiums. Unlike term plans where premiums are fixed, in critical illness cover it can change after every three years. So, one has to take care of this issue while buying the critical illness cover.