Critical Illness Insurance

As healthcare costs and medical inflation is rising exponentially, it is a wise decision to be protected from critical illnesses that are plaguing Indians of all ages. Critical illness health insurance

is specifically vital for primary earners of the family, people who have a medical history of critical diseases in their family, those who work in stressful jobs, and anyone who is 40 years old or older. Critical illness insurance can provide much-needed financial help when a critical illness is diagnosed.

What is critical illness insurance?

A critical illness insurance policy provides coverage when one is diagnosed with a critical illness.

What is critical illness?

A critical disease is a life-threatening condition and the cost of getting treatment for it is substantially high compared to other disease categories. Even though some insurance providers cover only certain critical illnesses in a health insurance plan, the coverage is not enough.

The critical illness benefit pays a lump sum amount when the policyholder is diagnosed with a critical disease listed in the critical illness policy. The amount can then be used to cover all the expenses related to the illness’s treatment. This is highly beneficial as treatment costs are quite high for critical illnesses in India. Note that the lump sum payment is independent of the health insurance plan or Mediclaim so you can get payouts from both these places if you have those policies as well.

When choosing a critical illness cover, the individual must consider the inclusions, exclusions, age, current medical status, family medical history, waiting period, survival period, and sum assured. The individual must also consider if the plan can be renewed lifelong or if there are limits to the renewal process. The person should consider whether he wants to purchase a standalone policy or a critical illness rider instead.

What is considered a critical illness?

The following critical illness list shows the common critical illnesses that are covered by most of the major insurance providers in India.

• Aorta graft surgery
• Multiple sclerosis
• Paralysis
• Coma
• Kidney failure
• Cancer
• Complete blindness
• Open heart replacement
• Stroke
• Deafness
• Heart valves repair
• Heart attack (only the first one)
• Primary pulmonary arterial hypertension
• Major organ transplant surgery
• Loss of speech
• Major bone marrow transplant surgery
• Open chest bag
• Lung disease
• Coma

As the list varies from insurer to insurer, it is best to check the types and number of critical illnesses that are covered by the insurance provider. The more coverage they provide the better.

Why should you buy critical illness insurance?

Getting a critical illness plan, whether it is term insurance with critical illness or any other combination of plans, is crucial because of the long list of benefits it provides the insured individual. Critical illness insurance India is important due to the following reasons.

A diverse range of illnesses covered

The critical disease plan ensures a wide range of critical illnesses. It offers better protection to the policyholder in case diagnosed with any of those ailments in the future. Some insurance providers cover over 30 types of critical illnesses to provide better coverage to the insured person and give them peace of mind.

Affordable premiums

The critical health insurance premiums are affordable compared to other types of insurance available in India. This means by paying a small monthly amount of insurance premium, you can be well protected after being diagnosed with a life-threatening disease. Many experts believe that a small coverage is always better than no coverage.

Benefits along with health insurance

Having only a health insurance policy or only a critical disease plan is not sufficient as both are equally vital. A critical plan that covers a range of illnesses is vital as it provides benefits on top of the existing health insurance policy that the policyholder has. This enables better coverage and better financial protection to manage all types of expenses whether medical or otherwise.

Financial support

Critical illness insurance provides financial aid when it is most required. As health is the most important aspect of anyone’s life, knowing that the policyholder is financially covered when he is suddenly diagnosed with a critical disease ensures he focuses on recovery. Without an insurance plan, the policyholder may have to look at other ways to pay for all the expenses which can put a strain on the family financially and emotionally.

Better funding for treatments

When it comes to life-threatening diseases, a lot of funds are required to get the best treatment. A critical disease policy comes in handy as it ensures better funds are available for all types of different treatments required. These treatments are oftentimes risky and expensive for someone to pay out of pocket. By having the means to pay, it becomes easier to pay the required amount promptly and get treated without delay.

Similar to income

Many families in India have a single breadwinner and if he falls ill due to a critical illness, the whole family suffers as a result. Having a plan in place ensures the policyholder gets a lump sum of money which can act as a substitute for income until he fully recovers from the illness. It can provide much-needed financial support to the policyholder and his loved ones.

Tax benefits

Purchasing a critical disease cover provides the policyholder with tax benefits as mentioned in Section 80D of the Income Tax Act, 1961. The policyholder can avail of a tax deduction of up to Rs. 25,000 while senior citizens can get a tax deduction of up to Rs. 50,000. The tax deduction benefits can also be availed when the plans are purchased for the policyholder’s immediate family member, parent, or spouse.

What does critical illness insurance cover?

The best critical illness insurance India policy has a long list of critical illnesses that are covered in the plan and a lower number of excluded ailments. The most common illnesses that can potentially occur should be included in the list of inclusions of the insurance policy. This is because the critical illness insurance policy will provide more extensive protection in case of a diagnosis and the policyholder can then submit a claim to get a lump sum amount and start treatment immediately.

What critical illness cover do you need?

The coverage that you need depends on mainly these factors; your age, medical history, family medical history, job type, and expenses. If you are above 40 years old, it is better to get a critical illness insurance plan that covers a wide range of illnesses. If you or your family members have a medical history of certain diseases, ensure the plan covers those. Next, determine how much premium you can afford to pay monthly to determine the right cover for you.

Critical illness Insurance vs Health insurance

Critical illness insurance is often confused with health insurance and even though they have similarities they are distinct in their offerings. Here are the major differences between the two types of insurance policies. For better protection, it is better to purchase both a health insurance policy and a critical illness insurance plan.

Coverage

Health insurance provides coverage for a range of situations that can impact health such as pre-existing ailments, accidents, and so on. It is possible to add riders to expand the coverage of a health insurance policy. A critical illness cover offers coverage for a set number of critical illnesses as specified in the policy document.

Premium

The premium of a health insurance plan depends on the insurer, coverage, family members added, and sum insured. In critical health insurance, the cover depends on the insurer, the number and types of ailments covered by the policy, and the sum insured.

Benefits

Health insurance benefits include reimbursements or cashless treatments depending on what is chosen during the policy purchase time. It is possible to increase coverage and add family members to the plan. In a critical illness policy, a lump sum amount is provided when a diagnosis is made of the critical illnesses listed in the plan document.

Policy validity

The health insurance policy is valid until the sum insured is completely exhausted or until the policy expires. For critical illness insurance, the validity is until the policyholder places a claim or until the policy expires.

Waiting period

Both health insurance and critical illness policies generally come with a waiting period. For health insurance, the waiting period can be 1 year or more while for the critical illness policy, the waiting period can be 90 days. The waiting period starts from the date on which the policy was purchased and a claim can only be made once the waiting period is over.

Sum insured

Typically, the sum insured for a health insurance plan is less than that of a critical illnesses policy. While the sum insured can go up to Rs. 10 lakhs for a health insurance plan, the sum insured can go up to Rs. 50 lakhs in some cases for a critical illness plan.

Exclusions in critical illness insurance policy

Even though an insurance plan for critical diseases covers the expenses incurred due to all the major ailments common in India that a person can suffer from, it does not include everything. It is important to know the common exclusions in the critical care plan to have realistic expectations and to understand what is outside the scope of the insurance plan. Most critical illness insurance plans exclude the following.

• Critical ailment caused by consumption of alcohol, tobacco, or drugs
• Cosmetic surgery and related complications
• Diagnosis of HIV/AIDS
• Treatment where hormone replacement takes place
• Dental care or surgery expenses including complications
• Critical disease caused due to an external or internal congenital disorder
• A condition caused by pregnancy or childbirth
• Ailments caused due to infertility treatments
• Treatment is given outside of India
• Critical illness caused due to unrest in the locality due to terrorism, military operations, war, etc.

The critical illness insurance plan does not cover any critical disease that is diagnosed before the waiting period is over. The policyholder can only put forward a claim after the waiting period is over which can vary from insurer to insurer. In most cases, the policyholder’s death that occurs within 30 days after the critical illness is diagnosed or surgery is performed is also excluded from the plan coverage.

Key Takeaways

A critical illness plan is crucial as it provides a financial safety net when the policyholder is diagnosed with a critical ailment such as a heart attack, cancer, or lung disease. It provides a lump sum amount that can be used to cover treatment costs, medical expenses, and so on. When choosing a plan, you must ensure you know the inclusions, exclusions, eligibility, waiting period, and sum assured to get the most out of it.

FAQs

Is any pre-existing disease covered under a critical illness insurance policy?

It depends on the type of pre-existing disease. If a person is suffering from a critical illness already, he cannot purchase a critical insurance policy. However, if he has a pre-existing lifestyle disorder that raises the risk of critical illnesses, he can purchase the insurance.

Are critical illness premiums tax deductible?

Yes, cancer and critical illness insurance premiums are tax deductible just like the other types of insurance premiums according to Section 80D of the Income Tax Act, 1961. The policyholder can claim a deduction of up to Rs. 25,000 in a financial year.

Is critical illness part of health insurance?

A health insurance plan with critical illness cover exists but the payout is often a lump sum that is insufficient to cover all the expenses incurred. It is recommended to get critical care insurance and standard health insurance separately.

How much coverage do I need for critical illness?

When determining which critical illness benefit policy to purchase you must consider your average monthly expenses, inflation, medical history (self and family), treatment costs, and so on. This will give a realistic view of how much premium you can afford and how much coverage you require.

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