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Critical Illness Insurance

A lot of individuals and families struggle considerably with the diagnosis of a life-threatening disease. There are a few reasons for the same. Firstly, it can be emotionally draining to find out about such diseases. And more importantly, such illnesses can be quite expensive to treat. The emotional and financial stress can unsettle even the strongest of individuals. However, there is a sensible way to keep yourself and your loved ones safe from such occurrences. You can choose a critical illness policy.

What is critical illness policy?

A Critical illness policy is a defined benefit health insurance policy that aims to protect the insured and their loved ones against life-threatening diseases. Examples of such diseases include liver transplants, cancer, heart attack, etc.
The presence of a critical illness plan will ensure that you have the financial firepower to tackle such medical conditions head-on. Most health insurers offer a lump sum compensation on the diagnosis of such critical illnesses. And you can use the lump sum compensation to go about the treatment and other medical expenses.

Why opt for a Critical Illness plan?

Medical inflation is one of the highest inflation rates in the country. As the prices go up, it is only sensible to protect yourself with plans. And considering the exorbitant costs of treating life-threatening diseases, a critical illness plan can be your much-needed safety net in such cases.

For example, the cost of treating breast cancer can range anywhere between Rs. 14 lakhs to Rs. 16 lakhs. Likewise, the cost of a liver transplant can be in the range of Rs. 25 lakhs to Rs. 36 lakhs. Relying solely on your savings might not be the wisest decision, since there can be a lot of other expenses to worry about.

In such cases, a critical illness plan will provide you with the finances to proceed with the treatment. An indemnity health insurance plan would provide coverage only for hospitalisation expenses. But there could be a number of expenses not covered such as loss of pay, home care treatment, etc. which could be expensive and might need to continue for a long time. This is where a Fixed Benefit Plan of Critical Illness comes into play.

How does a Critical Illness plan work?

When you buy a critical illness plan, your insurance provider offers you coverage for a number of life-threatening diseases. If you are diagnosed with any of these diseases, your insurer will pay the sum insured for treatment and various other expenses. This is a Fixed Benefit plan, i.e. when the insured event happens, a fixed amount of money, i.e. the sum insured amount would be paid in full, irrespective of the amount spent on treatment.
For example, Tuhin buys a critical illness cover of Rs. 25 lakhs and is diagnosed with failure of one of the major organs, which needs a transplant. The insurance provider will pay Rs. 25 lakhs for the transplant and other expenses.

Critical Illness standalone plan v/s Critical Illness rider: Which one to opt for and why?

Insurance providers will let you buy critical illness coverage either as a standalone cover or as a rider to an existing policy. A standalone cover offers better coverage since it is designed specifically for critical illness. The sum insured on offer is also more flexible and you must undergo a waiting period.
On the other hand, a rider Critical Illness plan’s coverage depends on the base plan’s coverage and so does the sum insured. However, in a rider, the coverage is valid from the first day. However, a Critical Illness rider might not have many plans listed as it is a specific add-on benefit.
If you are looking for specific Critical Illness coverage, a standalone plan with a slightly higher premium is highly recommended. If you want comprehensive coverage for your critical illness, a standalone critical illness plan is always recommended. However, if you are fine with a lower coverage albeit a lower premium, a Critical Illness rider might just be for you.

Why Critical Illness plan to be taken along with an indemnity health insurance plan?

If you already have a health insurance plan provided by your employer or an existing plan, complementing it with a Critical Illness plan can be quite sensible. By paying the premium for a standalone policy, you will secure the finances in the future, if there is a diagnosis of critical illness.
The health insurance plan will cover some of the expenses and the lump sum from the Critical Illness plan will aid you with other expenses. It can be even more helpful if you are the only earner in the family.

How is a critical illness benefit different from other health insurance plans?

One of the major differences between a critical illness plan and a health insurance plan is the treatment expenses. A standard health insurance plan will only cover expenses related to treatment and hospital bills. However, it will not cover other expenses such as loss of income, and other miscellaneous expenses.
On the other hand, a critical illness plan will offer a lump sum payment on diagnosis. Thus, allowing you to use the money for treatment as well as other expenses.

Features and benefits of critical illness insurance plans

Opting for a very specific type of coverage such as a critical illness plan comes with quite a few features and benefits. The following are some of them.

1. Financial support:
The diagnosis of a critical illness can be quite taxing, both mentally and financially. And in such times, the last thing that you would want to have is to worry about expenses. A Critical Illness policy will ensure that you have adequate financial resources to undergo treatment and surgery if needed. Thereby allowing you to focus on the treatment.

And considering that life-threatening illness requires a lot of specific treatment, the cost of which can be heart-wrenching. The plan will unburden you and your loved ones of the expenses so that the primary focus is on recovery.

2. Income source:
Should a critical illness get to a stage where you cannot work anymore, the critical illness plan can serve as a source of income. Provided that you opt for an adequate sum insured in the first place. The amount that you receive for treatment, can be used for living expenses as well. And can be particularly helpful if you are the only earning member of the family.

3. Coverage
Depending on the insurance provider that you opt for, the list of diseases covered under a critical illness plan can be quite expansive. It would be sensible to go through the list of illnesses covered by the plan.

4. Investment
Treatment for normal diseases has been quite expensive in the country. One can only imagine, how much the treatment for a critical illness would cost. Investing a small amount in a Critical Illness plan would ensure that the insured can undergo expensive treatments, which would otherwise be difficult.

5. Tax benefits
The premiums that you pay towards a critical illness plan will allow you a tax deduction under Section 80D.

Advantages of critical illness insurance

Here are some advantages of choosing critical illness insurance over a standard health insurance plan.

1. Treatment costs
The plan will cover all medical expenses as well as the cost of hospitalization of the insured, for the treatment of a life-threatening disease.

2. Other expenses
Should you opt for adequate coverage, you can use the sum insured for various other expenses such as a source of income, paying off debts, living expenses, school fees, etc.

3. Abroad treatment
Some insurers offer coverage for the treatment of critical illnesses even in other countries.

Illnesses covered in critical illness insurance

The actual coverage of a critical illness plan would largely depend on the insurance provider. However, the following are some common examples of critical illnesses that are covered by a Critical Illness plan.

● Cancer
● Stroke
● Heart attack
● Parkinson’s disease
● Alzheimer’s disease
● Chronic lung disease
● Chronic liver disease
● Kidney failure
● Major organ transplants
● Aorta surgery
● Brain tumour
● Artery bypass surgery
● Paralysis
● Multiple sclerosis
● Replacement of heart valve

Critical Illness plan vs. cancer plan

While a Critical Illness plan offers a lump sum payment on the diagnosis of a critical illness, a cancer plan is specifically designed for cancer treatments. A cancer plan covers the expenses of various stages of cancer, which can be quite useful.

Conversely, a Critical Illness plan offers coverage for a wide range of critical illnesses and not just cancer. Yet both plans can be great supplements to a standard health insurance plan.

5 best Health insurers critical illness policies

Here are the top 5 critical illness insurance policies that you can buy in the country right now, along with some basic details.

1. Bajaj Allianz Criti Care Policy
The plan offers coverage of up to Rs. 2 Crores. The minimum payment of the plan starts at Rs. 257 per month.

2. Care Health Insurance Critical Illness Insurance
The plan offers coverage of up to Rs. 6 Crores. The minimum payment of the plan starts at Rs. 10,000 to Rs. 15,000 per year.

3. Bharti AXA Life Critical Illness Cover
The plan offers coverage of up to Rs. 2 Crores. The minimum payment of the plan starts at Rs. 428 per month.

4. SBI General Insurance Critical Illness Health Insurance
The plan offers coverage between Rs. 3 lakhs and Rs. 10 lakhs. The minimum payment of the plan starts at Rs. 428 per month.

5. Niva Bupa’s CritiCare Insurance Plan
The plan offers coverage between Rs. 3 lakhs to Rs. 2 Crores. The minimum payment of the plan starts at Rs. 12,500 per year.

Who should opt for a Critical Illness plan?

The cost of treatment of critical illness can easily set you back a lot, financially. Here are a few groups, who should opt for a critical illness plan. Though it is a sensible decision to opt for one irrespective, if you fall into any of the following groups, it is highly recommended.

1. Earners of the family
If you are the sole earner in the family, it is recommended that you opt for a critical illness cover. The lack of such a plan can jeopardise all financial plans that you have made for your loved ones over the years. Also, it will put the future of the family at risk.

2. History of illness
Some of the critical illnesses are hereditary. If anyone in the family has been diagnosed with critical illness, it increases the chances of you encountering the same. It would be wise to choose a critical illness policy in such occurrences.

3. Hectic jobs
If you are working in a high-pressure environment, that requires you always to be on your toes, there is a higher chance of being diagnosed with critical illness. Due to prolonged stress at work, one might develop critical illnesses. It is advisable to opt for a Critical Illness plan if your work can put you under a lot of stress.

4. In your 40s
People who cross the age of 40 are a bit more susceptible to critical illnesses. Also, buying a Critical Illness cover in your late 30s or early 40s will allow you to buy a plan at a more affordable premium.

What is covered and not covered in a Critical Illness plan?

Buying a critical illness plan offers you access to the following coverages.

● Financial safety against medical expenses.
● Tax savings under Section 80D.
● Look in a period of 15 days.
● Option to renew the policy for a lifetime.
● Access to the best treatment.

● Injuries that are self-inflicted.
● Cosmetic and dental surgeries.
● Illness due to smoking, consuming alcohol, or tobacco usage.
● Sexually transmitted diseases.
● Illness during the waiting period.

How to select an ideal critical illness insurance plan?

Once you decide to opt for a critical illness plan, you can use the following factors to find the ideal plan for your needs.

1. Buying early
Opting for a Critical Illness plan in your younger days will yield dividends later. When you buy the policy early, you will end up with a policy that has adequate coverage but does not cost a lot of money. Also, the coverage on offer varies vastly based on the age of the applicant. Younger people will receive wider coverage at affordable premiums. Whereas older people might find a few restrictions when it comes to coverage and it will come at a slightly higher premium.

2. Sum insured
Make sure that you choose a higher sum assured. It will provide you with an adequate financial cushion, should things not go in your favour in the future.

3. List of illnesses
You must access the website of your insurance provider and get a better look at the list of critical illnesses covered by them. Insurers who cover more illnesses offer a wider coverage.

4. Inclusions and exclusions
It is always wise to go through the inclusions and exclusions of any policy and it holds good for a Critical Illness plan as well. The inclusions and exclusions will help you get a better understanding of the limitations and capabilities of the plan.

5. Renewal
You can check whether the plan offers lifetime renewal options or has a maximum age till you can buy or renew the plan.

6. Waiting period
Insurers usually have a waiting period for critical illness plans. During the commencement of this period, you cannot file for any sort of claim. Ensure that you look at the waiting period of your critical illness plan.

How many Critical Illnesses to have?

The sum insured by a critical illness plan can vary a lot depending on your requirements. The average cost of treatment for a critical illness such as cancer can range between Rs. 25 lakhs to Rs. 30 lakhs. There can be a lot of other expenses as well. Thus, opting for a plan that has at least 40 lakhs would give you enough buffer to cover the expenses and a surplus for other expenses as well.

How to file a claim for critical illness policy?

To file a claim for critical illness coverage, you must inform your insurance provider about the intent. To file such a claim, a diagnostic report is needed, that states the critical illness the insured is suffering from. You can either opt for cashless treatment or reimbursement of the expenses.

● For cashless services, you will need to fill out a pre-authorization form at the insurance desk of a network hospital.
● The hospital will then inform your insurance provider about the claim. On reviewing the request, they will either accept or reject the claims.
● Based on the approval, the insured can be hospitalised and undergo the necessary treatment.
● Prior to the discharge of the patient, the bill will be settled directly with the hospital.

● The insured can get admitted to a non-network hospital and continue with the treatment.
● Once discharged, you can file a claim for reimbursement and provide all the necessary documents for the claim. Below is a list of all the documents needed.
● Your insurance provider will access the claim request and approve or reject the claim.
● On approval, you will receive the reimbursement amount directly to your registered account number.

What are the documents required at the time of critical illness insurance claim?

Keeping the following list of documents ready for the claim will ensure that your process is smooth and without any hassles.

● Claim form that is duly filled out. Most insurance providers allow online forms, which are simpler and faster to fill out.
● Consultation reports related to critical illness.
● Diagnostic reports related to the illness.
● NEFT details of the account, where you want the sum insured to be deposited in.
● Identification proof.
● All records of pre and post-hospitalisation.

Your insurance provider will verify the claim and all the documents submitted. It is quite possible that may reach out to you for any additional documents to support the claim. Upon completion of the verification process, they will transfer the amount to your account.

Tax benefits under a critical illness insurance policy

The premium that you pay towards buying a Critical Illness plan, allows you for a tax deduction under Section 80D of the Income Tax Act. Here are the maximum deductions under the section.

ParticularsAllowed deduction for Self, spouse and childrenAllowed deduction for ParentsMaximum deduction
Everyone is under 60 yearsRs. 25,000Rs. 25,000Rs. 50,000
Parents are above 60 yearsRs. 25,000Rs. 50,000Rs. 75,000
Everyone is above 60 yearsRs. 50,000Rs. 50,000Rs. 1 lakh

Factors to keep in mind while opting for a critical insurance policy

Before choosing a Critical Illness plan, you must keep in mind the following factors. It will help you zero down on the best policy for yourself.

● Ensure that you go through the inclusions and exclusions of the policy. It will help you understand the policy better and avoid unwanted claim rejections as well.
● Make sure to find out any other perks of buying a Critical Illness plan from an insurance provider. These could be lower premiums or benefits on policy renewal.
● Do not forget to look at the claim settlement ratio of an insurance provider before choosing a policy.
● Do not forget to find out the maximum age that the policy will provide you cover for.

To Sum Up!

A critical illness plan acts as an excellent supplementary plan to your health insurance plan. Offering widespread coverage against life-threatening diseases and offering you financial assistance as well. Using the above information, you will be able to find the apt Critical Illness plan for your needs.

Frequently Asked Questions

Buying a critical illness plan despite a Mediclaim plan offers you better protection of your savings, provides cover against critical illness, and gives you access to the perks of a Critical Illness plan

The survival period in a Critical Illness plan refers to the duration that the insured must survive to be able to get the benefits of the plan. It usually ranges between 14 to 30 days from the diagnosis of a disease.

Leading Health Insurance Companies

Manipal cigna health insurance
Aditya birla capital
STAR health insurance
care health insurance

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