Critical Illness Insurance: Managing a Crisis Situation

"There are worst things in life than death." – Woody Allan

Yes, we totally agree.

With so many uncertainties that life offers, the only mantra is to be prepared. While your life insurance policy will ensure the financial well-being of your loved ones in case of your death, what if you are detected with a life threatening critical ailment? Well, spine-chilling, right? Honestly, that’s the last thing that anyone would wish for.

What is a Critical Illness Insurance Plan?

You might debate that as you are covered in a comprehensive health insurance plan and also under group medical policy offered by your employer, you do not require any additional coverage. Well, yes, but any critical illness calls for specialized treatment & care and as your comprehensive health plan has limitations on hospitalization, doctors' fees, etc. it will not cover the entire medical expense towards treatment. In simpler terms, there is a limit on certain expenses like prosthetic, intensive care or even medicines and your spending on such ailments is always more than what your health insurer will pay. In such cases, you'll have no option but you'll end up paying from your own pocket.

Examples of Critical Illnesses:

  • Heart attack

  • Stroke

  • Major Organ Transplantations

  • Kidney failure

  • Paralysis

Note: You can claim only once on your Critical Illness insurance policy and then it stands terminated.

Importance of Critical Illness Insurance

Any major sickness or illness can have a debilitating effect on the patient’s life. It leads to huge medical treatment costs and the same time leaves the family members shattered both emotionally as well as financially. At such circumstances, a Critical Illness Insurance comes as a real saviour, guaranteeing financial protection whenever there is shortage of funds for getting the patient treated. Here, the insurance company offers an amount in lump sum in case the insured gets diagnosed with any of the critical illnesses mentioned in the policy document. Covering the medical costs of the patient as well as the day-to-day expenses of the family members would be taken care by the Critical Illness Insurance Plan.

Critical Illness Insurance Plans from Top Insurers

Important Aspects to Look for Critical Illness Insurance

Once you have decided to buy a critical Illness plan, it is important to evaluate what’s on offer. Below are few checkpoints you might want to consider.

  • Survival Period: Typically, a critical illness policy is bundled with a survival clause of 30 days; some health insurance companies, depending upon the illness, may extend it beyond 30 days—that signifies that the insured should survive for 30 days post diagnosis of the ailment to claim the policy. This is different from the waiting period that most insurers impose on the policy holders after the purchase of a health insurance plan.

  • Total Ailments Covered: One of the first few things you need to consider before freezing on any Critical Illness insurance is to check the total critical ailments covered by the policy. While some plans like HDFC Ergo Critical Illness Insurance covers 8 critical ailments, Religare Assure plan covers as many as 20 major illnesses. Hence, it’s imperative to properly research the plans before finalizing on one.

  • Built-in Coverage: While the critical Illness plan is aimed to provide financial armor against the detection of any major life threatening disease, some insurance companies offer several built in coverages. Personal Accident Cover, Child Education Benefit, Hospital Cash, Complementary Health Checkup, etc. are some of them so that your loved ones are least affected in situations you are incapable of supporting them financially, as the illness strikes.

  • Pre-existing Disease: While some plans will cover any pre-existing diseases after a waiting period of 48 months, plans like Religare Assure does not cover them at all. Hence, one need to do a careful assessment on what’s covered in pre-existing clause.

  • Free-look: Mostly, all insurance companies offer a free-look period of 15 days to review your decision. During this period, if you find the plan unsuitable to your needs, you can request for cancellation and subsequent refund.

  • Tax Benefit: As per the prevailing rates of the Income Tax Act, 1961 (u/s 80D), you can avail the tax benefit on the premium you pay towards the premium.

How to Choose the Best Critical Illness Insurance?

Mentioned below are the factors that you need to keep in mind to select the best critical illness insurance:

  • Coverage: It makes sense to opt for a product that provides maximum coverage. Here, it is important that you figure out the number of critical illnesses that are covered under the plan. The more coverage for illnesses, the better the insurance policy.
  • Survival & Waiting Period: Usually critical illness policies have a survival clause of 30 days from the date of diagnosis for the person who is insured. A waiting period of 90 days too should be adhered from the beginning of the insurance policy. Also, there is a waiting period for the pre-existing diseases which is around 3 to 4 years. Opt for the critical illness cover that has a limited waiting and survival period.
  • Sum Assured: Opt for a critical illness cover that offers a cover of that sum assured you wish to opt for in case of an emergency.
  • Incurred Claim Ratio: Insurer’s keeping up their promises to settle your claim on-time and hassle-free is what you should be looking for. Incurred Claim Ratio is what you should look out for while opting for a good critical illness health insurance.

How to Choose the Sum Insured?

The above chart demonstrates an alarming growth in cost of treatments over years. With this upsurge, it is practical to choose a sum insured basis a systematic research involving the cost of treatments, ensuing recuperative aids, potential financial liabilities in case of income loss, etc. Most insurance companies offer vast range of sum insured ranging from Rs.5 Lac to as high as Rs.1 Crore. Million Dollar Question: Standalone or as a part of health plan? You are blessed with a choice there. You can either opt for a standalone policy or can combine it to form a part of your base health plan. There are no major changes in the policy terms and conditions in both the options. The choice between a standalone policy or as an add-on feature purely depends on your individual needs.

By and large, a standalone policy provides more flexibility in the sum insured and extensive cover in comparison to an add-on. The cap on sum insured for an add-on is mostly the same as the base plan. Hence, if you have invested in a health plan of Rs.3 lakh and opt for a critical illness add-on with it, it is very unlikely that the insurance company will offer you a sum insured in excess of Rs.3 lakh for the add-on cover.

Exclusions of Critical Illness Insurance

Every insurance policy has its own terms and conditions and similarly, Critical Illness Insurance Plan comes with its own restraints. Some of the conditions mentioned below are not covered under the plan:

  • Critical Illnesses as a result of self-inflicted injury

  • Critical illnesses arising due to alcohol or drug use/misuse/abuse

  • Critical Illnesses acquired due to Human Immune-deficiency Virus (HIV) infection

  • Critical Illness caused due to any cosmetic & aesthetic and obesity related treatment

  • Critical illnesses attributed to congenital diseases

For details on what's excluded in the coverage of critical Illness Plan, kindly refer to the policy wordings.

How Much it Will Cost You?

While the cost of cover largely depends upon the sum insured, age of the insured, location, etc. below is the comparison chart of few of the general insurance companies offering Critical Illness Insurance Plan in India.

Bharti AxaSmart Health Critical Illness1,707
Apollo MunichOptima Vital1,861
Max Bupa Health AssuranceCritical Illness1,277
HDFC ErgoCritical Illness Plan1,431

Yearly premium for a cover of Rs.5 Lakh for a 30 year old non-smoker male residing in Mumbai

In conclusion:

With the significant variations in our way of life and frenzied rush to over achieve, ailments that were once unheard of are, at the moment, fairly common. Lack of adequate physical activity, unhealthy diet and stress can be held accountable for it. While our busy schedules might not allow us to invest enough time to take care of our bodies, the only alternative left is to make proper arrangements for a stable financial wellbeing. After all, when our bodies go on the blink as a result of any Critical Illness Insurance, why should our kith and kin suffer?

Who Should Buy Critical Illness Plan?

Critical Illness Insurance Plan is intended to shield you with a strong financial backup in case you’re diagnosed with any of the major illnesses. The money you claim on your policy can be used to pay off mortgage, children’s education, home improvement, medical treatment, etc. – just the way you want. Opting for a critical Illness cover will be an ideal choice for you, if –

  • You have not suitably arranged to save for the rainy days

  • Your health plan or the employer insurance cover isn’t sufficient to cope with any expensive medical care

Documents Requirement for Critical Illness Insurance Plan

The Below Documents Would Be Required For Applying For A Critical Illness insurance Plan:

  • Age Proof: The age proof can be any of these – Driving license, School/college certificate, Passport, PAN card, Birth Certificate.
  • Identity Proof: Voter ID, driving license, PAN card or Aadhar card can be used an identity proof.
  • Address Proof: Electricity bill, Bank account statement can be presented as the proof of address.
  • Income Proof
  • Duly Filled Proposal Form

Documents Requirement for making a Claim under Critical Illness Insurance Policy

To Initiate The Claim, The Insured Should Offer The Below Documents For The Initial Assessment Of The Claim:

  • Duly filled and signed claim form
  • Medical Certificate confirming the diagnosis of Critical Illness
  • A medical certificate, investigation test report, etc. from an attending Medical Practitioner authorising that the claim does not relate to any Pre-existing conditions or any Illness or Injury which was diagnosed within the first 90days of the inception of the Policy.
  • Discharge Card/ Death Summary from the hospital, if applicable
  • First Consultation letter and subsequent prescriptions
  • Specific documents listed under the respective critical illness
  • Know your client doc (KYC)
  • In the case critical illness arises due to an accident, FIR copy would be required.
  • Other medical or Pharmacy Bills along with the required prescriptions

Customer Reviews on Critical Illness Insurance Plan

Critical illness insurance cover offers you a lump sum amount in case of the diagnosis of the critical illness that is mentioned in the particular policy document. It covers an array of diseases such as kidney failure, heart attack, multiple sclerosis, coma, paralysis, stroke, etc.

The costs and time to treat these critical illnesses is sky high and therefore having a separate critical illness insurance plan in place would take care of all these costs and also help your family to manage their day-to-day expenses. Therefore, it is better you compare the critical illness covers of different insurers and then zero down on the best one.

FAQs on Critical Illness

What Diseases Are Commonly Covered Under Critical Illness List?

Different insurance companies cover various critical illnesses under their critical illness policy. The list of illnesses covered vary from one insurer to another depending on the insurance quote. Some of the common diseases covered are:

  • Cancer
  • First heart attack
  • Open heart replacement or repair of heart valves
  • Coma up to a certain severity
  • Major organ/bone marrow transplant
  • Motor neuron disease with permanent symptoms
  • Kidney failure
  • Stroke resulting in permanent symptoms
  • Permanent paralysis of limbs
  • Multiple sclerosis
  • Major burns
  • Loss of speech
  • End stage liver disease
  • Deafness
  • End-stage lung disease

Is Critical Illness Rider Available On Edowment Plans And Money Back Policies?

Riders may be attached to your insurance plans such as term plan, endowment plan, money back plan. The critical illness rider helps customize your life insurance policy.

This rider covers 4 critical illness conditions: cancer, first heart attack, stroke, and open chest CABG. If you are diagnosed with any of these 4 critical illnesses, future premiums payable under the plan and riders (if any) are waived off while your life cover as well as other rider covers continue.

Why Should I Buy Critical Illness Insurance? Is It Important?

Life can throw bouncers at you when you’re least expecting them. You should buy a critical illness plan for yourself and your family members to battle financial challenges if diagnosed with a critical illness. With a critical illness plan you can receive a lump sum amount that:

• Pay off debts
• Takes care of treatment cost
• Covers loss of income due to inability to earn

Can I Make Multiple Claims For The Same Illness Or Any Other Critical Illnesses That Are Listed?

During the policy period, you are allowed to make only one claim on any of the listed critical illnesses mentioned in your policy document.

As soon as you make a claim, the lump sum amount shall be paid out for the particular critical illness. The policy would be automatically terminated and subsequent renewals would be allowed in the policy of the particular insured person. If at all the policy has been issued to more than one individual then the policy shall still remain active for the other policy members.

Certain insurance policies continue other benefits except for the one which you already made the claim.

If you are making a critical illness claim then the hospitalization expenses incurred will be paid under Health Insurance. The Lump sum benefit will be paid after the survival period under Critical Illness cover.

It is always better to speak to your insurance company about this clause as some insurers may allow you to make more than one claim.

I Wanted To Understand How Is The Pemium Determined For Critical Care plans?

Premiums for critical care insurance are determined on the sum insured stated in the policy document, the complete policy tenure, gender and health status of the insured person.

The premiums vary from one individual to another depending on all these factors mentioned above.

Is it better to take critical illness cover or health insurance?

A critical illness cover offers you a lump sum amount in case of diagnosis of the critical illness that is mentioned in the policy document. However, a health insurance reimburses the medical expenses borne by you. Hence, it is better that you buy a separate critical illness cover.

Can I change the sum assured during policy tenure?

No, you cannot change the sum assured during the policy tenure.

Do I get any tax benefits under this policy?

Yes, the premiums that you pay for your critical illness insurance cover qualifies for an income tax deduction under Section 80D of the Income Tax Act, 1961.

Can I purchase a critical illness insurance policy online?

Yes, you can purchase a critical illness insurance policy online. You can go on the particular insurer’s website to get the needful done.

Leave a rating!
5.0 (2 votes)