What is Critical Illness Insurance?

What is Critical Illness Cover in Health Insurance?

Critical illness insurance is a type of health insurance policy that provides coverage for critical illnesses or life-threatening diseases, such as cancer, heart attack, stroke, kidney failure, paralysis, etc. It provides a lump sum payout if you are diagnosed with a critical illness covered under your policy, irrespective of the actual cost of treatment. Moreover, you can buy critical illness cover as a standalone policy or as a rider to your existing mediclaim policy.

Unlike standard health insurance policies, critical illness insurance does not reimburse actual medical expenses but offers a fixed payout on the first diagnosis of a covered critical illness. This amount can be used to pay for medical treatments and ongoing care, as well as compensate for loss of income, day-to-day household needs, children's education, loan repayment, etc.

Key Features of Critical Illness Cover

Take a look at some of the key features of critical illness cover in health insurance:

• Coverage for Major Illnesses - Critical illness plans cover a wide range of life-threatening diseases, including cancer, heart attacks, strokes, kidney failure, brain surgery, etc. The number of illnesses covered can vary from insurer to insurer, but some plans cover up to 100 critical illnesses.
• Lump Sum Payout - Health insurance companies provide a lump sum benefit in case you are diagnosed with a listed critical illness for the first time. This amount can be used to pay for medical treatment and recovery expenses, reducing the financial burden during this health crisis.
• Waiting Period - All critical illness insurance plans have a waiting period of up to 90 days. You cannot file a claim unless this waiting period is served. However, the waiting period may vary from plan to plan.
• Survival Period - Critical illness plans also come with a survival period of up to 30 days. As per the survival period clause, you can qualify for a critical illness benefit only if you survive this period after being diagnosed with a critical illness.
• Single Claim Policy – A critical illness insurance policy allows you to file only one claim. Your insurer will pay the entire sum insured after your first claim. Hence, once the benefit is paid, the policy will cease to exist.
• Coverage Beyond Treatment Expenses - The lump sum payout received on the diagnosis of a critical illness can be used for expenses beyond medical treatment, including day-to-day expenses, loss of income, loan repayment, children's education, etc. This helps to ease the financial burden of everyday expenses while you are recovering from a critical illness.
• No Coverage for Pre-existing Diseases – Most critical illness insurance plans do not cover any congenital condition or pre-existing diseases (PEDs).
• Hassle-free Claim Process - Claiming a critical illness insurance policy is hassle-free. Most insurance companies require basic medical documents, such as diagnosis reports, doctor's prescription, etc., for verification, and process the claim quickly.

Benefits of Critical Illness Insurance

Check out the top benefits of buying critical illness insurance:

• Extends Financial Support - A critical illness cover provides a lump-sum payment upon diagnosis of a covered critical illness. This is a significant advantage as it gives you immediate access to funds when you are facing a health crisis.
• Eases the Financial Strain on Your Family - In case you are diagnosed with a critical illness, your family may have to deal with not just medical expenses but also loss of income if you are unable to work. In such situations, critical illness insurance safeguards your family from any financial hardship, as the insurance payout can be used to cover household expenses during your recovery.
• Makes Expensive Treatments Affordable - Treatments for critical illnesses can be incredibly expensive. Even with a good health insurance policy, significant out-of-pocket costs can arise. However, the lump-sum payment from a critical illness policy can help you afford the best possible treatment without worrying about its cost.
• Pocket-friendly Premiums – The premium for a critical illness cover is quite affordable, despite high sum insured. This may not be possible if you buy a regular medical insurance plan with a high sum insured.
• Tax Benefits- The premiums you pay for critical illness cover are eligible for tax deductions under Section 80D of the Income Tax Act, 1961. You can claim tax benefits for up to ₹25,000, and up to ₹50,000 for senior citizens.

Why Should You Buy a Critical Illness Cover if You Already Have Health Insurance?

Treating a critical illness is quite costly. For instance, the average cost of cancer treatment in India ranges from ₹2.5 lakh to ₹20 lakh. Besides, the treatment may not just include hospitalization but also day care procedures like chemotherapy and radiotherapy used in cancer treatment. Moreover, you may have to leave your job during the treatment, leading to a loss of income.

A standard health insurance policy will only reimburse hospitalization and day care-related expenses. It will not provide financial support for your loss of income or other monetary liabilities. Besides, you will have to pay a very high premium if you buy a mediclaim policy with a high sum insured.

However, if you buy a critical illness insurance policy, you will get a lump sum benefit as soon as you are diagnosed with a listed critical illness. It not only pays for your costly treatments, therapies and medicines but also acts as a replacement for the loss of income. You can use the amount to pay for your day-to-day expenses, loans, children's education, etc. Moreover, you do not have to pay an expensive premium to ensure a critical illness cover.

Hence, it is a wise decision to buy a critical illness cover along with your health insurance policy.

Things to Keep in Mind While Buying a Critical Illness Cover?

Here are a few things you should keep in mind while buying a critical illness cover:

• Ensure the policy covers a wide range of critical illnesses, especially those you may be at a higher risk for.
• Evaluate your needs and budget to decide between buying a critical illness rider and a standalone policy.
• Choose an adequate sum insured for your critical illness policy that would sufficiently cover treatment costs and living expenses while recovering from a critical illness.
• Check the waiting period before filing a critical illness insurance claim.
• Look for a shorter waiting period and survival period, as it determines when you can receive the critical illness benefit after diagnosis.
• Opt for a policy with a simple and hassle-free claim process, ensuring quick access to funds during a medical emergency.
• Choose an insurer with a high Claim Settlement Ratio (CSR) of 90% or above to increase the likelihood of your claim getting settled.
• Carefully review the policy document for any exclusions or limitations that may affect your coverage.

How to File a Claim with a Critical Illness Insurance Policy?

The steps to claim a critical illness insurance policy are as follows:

Step 1: In case you are diagnosed with a critical illness listed in your policy, contact your insurance company to register your claim.

Step 2: Submit the required documents, such as an accurately filled claim form, a copy of the health card, diagnostic test reports, medical certificate confirming the diagnosis of critical illness, etc., to the insurer. These documents may vary based on the insurer and the claim.

Step 3: Upon receiving the documents, the claims team of the insurance company will verify the submitted details.

Step 4: On the basis of the verification, your claim will be approved or rejected.

Step 5: If the claim is approved, you will receive the critical illness benefit.

Documents Required to File a Critical Illness Insurance Claim

You may need to submit the following documents while filing a critical illness insurance claim:

• Duly filled and signed claim form
• ID proof
• Doctor's certificate advising hospitalization
• Copy of diagnostic test reports
• Copy of doctor's prescription
• Copy of hospital discharge summary
• Any other document requested by the insurer

Note: The exact list of claim documents may vary from one critical illness plan to another.