Critical Illness Insurance - A Quick Guide

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Critical illness insurance is wherein the insured gets a lump sum amount in case he/she gets diagnosed with a critical illness. You heard it correct, right at the moment of diagnosis. The sum assured received by the insured is usually tax-free. Though a typical critical illness policy might seem expensive but considering the valuable benefits, it’s worth every penny.

The most common critical illnesses covered under this plan are as follows:

  • Heart attack
  • Stroke
  • Cancer
  • Organ transplant
  • Paralysis
  • Blindness
  • Disability
  • Terminal illnesses

Why Should You Buy Critical Illness Plan?

Well, because of the simple reason that it serves a unique purpose which is served neither by life insurance nor health insurance. Life insurance provides a lump sum in case of death of insured but not a penny if the insured survives a critical illness. Health insurance, more often than not, comes with clear exclusions on critical illnesses.

Here’s a medical fact that further justifies the wisdom in getting a critical illness cover. 95% of the people suffering a heart attack survive but take a long time to recover financially and switch to their old lifestyle. The figures are strikingly parallel for stroke and cancer patients. Diagnosis of critical illness is in itself a life changing event that can shatter one’s dreams oozing out all the savings. In this age of inflation, where rising medical costs keep haunting the common man, getting critical illness cover is just the right thing to get financial assistance against unforeseen medical contingencies.

Medical Insurance VS Critical Illness Cover

Critical illness cover is quite different from a plain health insurance plan. Here are the few points of difference between them.

Medical Insurance

Critical Illness Cover

It works on the basis of recurrent benefits.

So, if one was hospitalized multiple times in a year, he can get the medical benefits from his insurance policy multiple times, provided his claim is valid and he does not exceed the suminsured limit.

It provides a one-time fixed benefit and is to be  touched only when the treatment costs are very high.

So, if one was diagnosed with a critical illness within the policy tenure, he gets the lump sum in full, at one go. But there and then the benefit ceases till the policy is renewed.

The pre-requisite for filing a claim is hospitalization for more than 24 hrs.

The pre-requisite for filing a claim is getting diagnosed with a critical illness (irrespective of whether or not the insured was hospitalized) 

It provides the expenses incurred on pre and post hospitalization.

It provides the expenses incurred not just on hospitalization or treatment but extends a bit further to make up for the overdue debts and   lost income due to illness.

Critical illnesses are treated as exclusions in a health plan.

Only the critical illnesses are covered here.

 

Look Out

  • Illnesses Covered – Critical illness policies differ widely in terms of the diseases being covered. Most of the insurers cover 8 critical illnesses, but some can cover upto 20 illnesses.
  • Know the Deal - Make a note of the sum assured being offered under a plan along with additional benefits such as hospital cash benefit and surgical benefits. Other question to ask is how extensive is the insurer’s network of hospitals.
  • Read the Fine Print Finely – When buying a critical illness cover, it is pivotal to know not just the inclusions but also the exclusions. One should also pay a note to the claim process and waiting period clauses.
  • Insurer’s Credibility – Perhaps the most important factor to consider while buying a critical illness cover is to check out the claim settlement ratio of the insurer for the last few years.

Keep in Mind

While applying for critical illness cover, you should specify whether or not you have a medical condition. At times, one medical condition might give rise to another medical condition, sometime later in life. Hence it is imperative on your part to be honest with your insurer about your medical history. Many insurers need the applicant to go through a medical test as a pre-requisite for getting the critical illness cover.  

Plan Comparison

Here is a comparison of the key critical illness covers you can get online (for a 27 year old) 

Insurer

Plan

Critical Illness Cover (Rs)

Premium (Rs)

Add Ons

Aegon Religare

iHealth (Gold)

3,00,000

4,709

Hospital Cash Benefit Surgical Benefit

Bharti AXA

Triple Health

2,00,000

1,521

-

Bharti AXA

Triple Health

5,00,000

2,315

-

TATA AIG

Health First

2,50,000

2,626

Hospital Cash Benefit Surgical Benefit

 

Critical illness cover comes both as a standalone insurance plan and as a rider on a health insurance plan, the features being more or less the same. It totally depends on your personal preference in which form you want to buy it. But according to the experts, it works best as a rider with a decent health insurance plan. 

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