Do You Need A Critical Illness Cover?

By | August 24, 2017

Do You Need A Critical Illness Cover?

Urban citizens nowadays are more vulnerable to diseases like high blood sugar, heart attacks or cancer owing to changes in lifestyle and food habits. Unlike minor ailments, treatment for these diseases could burn a hole in your pocket leaving you financially drained for a long time. The inching up of medical cost has spread awareness about Medical Insurance. IRDA reported a 17% CAGR in the claims paid since the last couple of years in case of Health Insurance.

If you already have a medical insurance, you might want to add another layer of protection to your portfolio by including critical insurance (CI). It would come handy in case of an occurrence of a serious illness when the financial requirement is beyond covering the cost of treatment.

What Is A Critical Illness Plan?

A critical insurance plan is different from a mediclaim policy. This one is primarily a Health Insurance policy which assures payment of a lump sum amount (sum insured) to the policyholder if he /she gets diagnosed with a critical ailment such as heart attack, stroke, cancer, kidney failure, organ transplant, bypass surgery, etc. With an increase in awareness, more and more critical illnesses are being brought into the ambit of a critical illness plan. The sum assured is typically over Rs 1 Lakh.

A CI plan can be availed as a stand-alone policy or as a rider to your Life Insurance policy. However, a stand-alone CI policy is always recommended as it is relatively more comprehensive in terms of ailments covered and sum insured.

Why Should You Buy A CI Plan When You Have a Health Insurance?

While a Health Insurance plan pays for the cost incurred during any treatment, critical insurance pays a lump sum on diagnosis of a critical illness. The lump sum amount can be used to pay for treatment, pay off debt, finance other requirements etc.

A serious illness can even cost a person his job. The sum assured can then be used to take care of medical costs as well as daily expenses.

A Health Insurance comes certain limitations and is often not sufficient to support you through a serious illness. It may not even cover the cost of treatment if you are going for alternative medical treatments.

Many Health Insurances plans do not cover medical tests and checkups unless there’s a 24-hour hospitalisation. With a CI plan, you can meet all miscellaneous expenses related to treatment, review and diagnosis of the disease with the sum assured.

CI Policies Come With A Bundle Of Benefits

  • The lump sum amount paid out to the insured person is completely tax free under Section 80D
  • The critical insurance policy helps the insured person to afford treatment of his/her choice from anywhere in the world
  • The terms and conditions associated with critical insurance are relatively more transparent compared to health insurance policies as they are underwritten during the application process and hence the policyholder knows it all upfront.
  • The sum assured in critical insurance is sufficient to pay for recuperation aids and lost income in case of reduced earning ability

Some Important Caveats That One Should Know Before Buying A CI Plan

  • Survival period – Critical insurance plan comes with a survival clause of 30 days, which means the policyholder should survive for 30 days post diagnosis of the illness to make the claim. It can be extended based on the ailment.
  • Pre-existing ailments are not covered under the plan.
  • Experts recommend buying this policy at the age of 40. However, buying it early helps as health risks are less and the premium is cheaper.

Before you zero in on a product, go through the terms and conditions and find out about all inclusions and exclusions associated. A good plan should be availed after in depth research.

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About Adhil Shetty

Adhil Shetty is the Founder and serves as the Chief Executive Officer of BankBazaar.com. Adhil has a Master’s degree in International Relations with a specialization in International Finance and Business from Columbia University in the City of New York, and a Bachelor’s degree in Engineering from the College of Engineering Guindy, Anna University. Adhil is an expert in Personal Finance (Car loan/Home loan and personal loan) and he majorly consults on investment and spends rationalization for the Indian loan borrowers. His guidance is number based with real time interest rate calculations and hence useful for consumer’s real time query.

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