Critical Illness Plans are specifically meant to cover treatments for critical illnesses such as hepatitis. Here’s a look at how these plans work.
We all dread falling ill with a major critical illness. It could be anything from a stroke to Hepatitis. But in case of someone we know or if we ourselves fall ill, it helps to know how we can safeguard ourselves, at least financially. That’s where Critical Illness Plans can help. But before that, you need to understand what Hepatitis is and what kind of treatment is needed.
What is Hepatitis?
Hepatitis is an inflammation of the liver and is caused by a viral infection. It can also result from the excessive use of certain drugs, medicines or alcohol. Hepatitis can turn into liver cirrhosis or liver cancer. There are 5 different types of hepatitis virus: A, B, C. D and E. While A and E are short-term, the others are chronic.
What’s the treatment?
While there is no medication for hepatitis A and B, there are drugs for others. Only in acute cases, hospitalisation is necessary.
Now, how do you get cover for such diseases? You need a Critical Illness Plan or a Critical Illness rider that will come along with your regular Life Insurance or Health Insurance.
What is a Critical Illness Plan/rider?
A Critical Illness Plan is a Health Insurance plan which will pay a lump sum amount if you are diagnosed with a critical illness. A critical illness rider is like a supplement to your Health Insurance plan. The cover will not be as good as a Critical Illness plan.
With a Critical Illness cover, the lump sum paid to the policyholder will take care of the treatment and medical care costs, as well as expenses incurred during recuperation. Riders usually pay out only the sum assured and may not include hospitalisation expenses.
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How is a Mediclaim policy different?
A Critical Illness plan is a defined benefit plan where the amount that will be paid to the policyholder is fixed at the commencement of the plan. A Mediclaim Policy is one that reimburses any expenses incurred by the policyholder.
What does a Critical Illness Plan/rider cover?
Critical Illness Plans cover a wide variety of critical illness. However, riders might cover only specific critical illnesses. Most insurance providers offer coverage for up to 37 major critical illnesses. The sum assured for a critical illness plan is usually in the range of Rs. 1 lakh and Rs. 6 lakhs.
How much Critical Illness cover would you need?
This will, of course, depend on the type of critical illness. Ones that require years of treatment will cause you to shell out more. Falling prey to a critical illness will have a negative impact on your lifestyle and might even affect your earning capacity. Not having a Critical Illness Plan would mean borrowing money or liquidating existing investments to cover medical expenses.
Before calculating the cover you might need, you should consider your family history, your type of job, age and also factor in increasing medical costs. So, a basic plan for Rs. 3 lakhs is a must. If your family has a history of critical illnesses, you could go for a higher cover.
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Waiting period for a Critical Illness Plan
Most Critical Illness plans have a waiting period of 30 days after being diagnosed with an illness. The policyholder can make claims only after this waiting period. Remember, if your plan has a waiting period of 30 days, the policyholder will need to survive for 30 days after being diagnosed to be eligible to make a claim.
There is also a waiting period of 30-90 days after you buy the policy. A critical illness detected within this waiting period will not usually be covered under the policy.
Where can you get a Critical Illness Plan/rider?
You can get the policy or rider from a:
- Health Insurance company
- Life Insurance company
If you choose to get a Critical Illness Plan from a Life Insurance provider, you might only get it as a rider to your Life Insurance policy. If the Critical Illness Plan is added as a rider to your Life Insurance policy, there are two situations that you might have to deal with:
- The base policy will continue after the Critical Illness rider is utilised.
- The base policy is terminated if the Critical Illness rider is utilised during the policy term.
Speak to your insurance provider regarding this.
What is the difference between a Critical Illness Plan and rider?
If the Critical Illness plan is a rider added to the Life Insurance policy, the premium payable remains the same for the entire term of the policy. This means a more affordable policy. A major benefit of getting a Critical Illness cover as a rider with your Life Insurance policy is that after the Critical Illness cover is utilised, the insured person will still have an existing life cover.
For a standalone Critical Illness Plan, the premium you need to pay will keep changing as the policyholder advances in age. Remember, it is difficult to find an insurance provider who will be willing to offer a life cover to a person who has a critical illness.
A more convenient option would be to get a Critical Illness Plan from a Health Insurance provider. This is a more popular choice. These policies offer the policyholder a higher degree of flexibility to choose a higher sum assured compared to a plan that is offered as a rider.
Additional Reading: 7 Helpful Tips To Choose The Best Health Insurance Plan
Tax benefits of Critical Illness Plans
Critical Illness Plans offer the policyholder tax benefits under Section 80D of the Income Tax Act just like other Health Insurance policies. Individuals below the age of 60 years can claim up to Rs. 25,000 in tax deductions while senior citizens can claim up to Rs. 50,000 in deductions.
Before choosing a Critical Illness Plan, remember to read the terms and conditions of the plan and note the exclusions mentioned. You have to check if all the critical illnesses such as hepatitis that you want a cover for are mentioned in the policy.