Critical Illness Insurance

Critical illness insurance policy offers coverage against life-threatening diseases such as cancer, heart attack, renal failure etc.
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Importance of a critical illness insurance policy
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3 mins
05-May-2023

The changing lifestyle has significantly impacted on human health, resulting in critical illnesses among all age groups. A critical illness insurance policy can save you from the financial burden that may occur due to such illnesses.

Coupled with increasing healthcare expenses, tackling with critical illness and its treatment has become challenging. Precisely why, having a critical illness insurance policy becomes more crucial. Critical health insurance policies not only give you financial security but also helps you focus on your treatment and recovery.

What is critical health illness insurance?

The policy offers comprehensive coverage against life-threatening conditions. When you opt for a critical illness policy amidst the rising medical costs, you safeguard your savings from being drained due to high treatment charges.

Most health insurance plans offer critical illness as an add-on cover with an additional premium.

Who should buy a critical illness insurance policy?

A critical illness insurance policy can be beneficial for the following individuals:

People over 40 years of age

People over 40 years old are more vulnerable to such illnesses. Hence, advisable to opt for a critical illness insurance plan to save themselves from financial burdens during emergencies.

Individuals with a critical illness history in the family

Many serious illnesses have hereditary causes, and individuals with such a family history must opt for this insurance plan.

Individuals with high-risk occupations

Individuals with high-risk occupations, such as construction workers, firefighters, and pilots, should consider buying a critical illness insurance policy. This coverage provides financial protection against serious health issues that may arise from their hazardous work environments.

Primary earners

If you are the sole earner in the family, you must consider opting for a critical illness policy. It will keep you financially equipped to tackle with the medical expenses for critical illness treatments. You do not have to worry about the availability of fund and can required treatment for your health conditions.

Critical illness plan: How it can help

Treatment of health conditions, such as heart attack, organ transplants, cancer, or renal failure can be expensive. A critical illness policy enables you to access quality healthcare services without worrying about funds.

Key features of a critical illness insurance plan

Key features of critical health insurance plans include coverage for life-threatening illnesses, a lump-sum payout upon diagnosis, access to specialized medical care, and flexibility in using funds for treatment or recovery expenses.Here are some key features of critical illness insurance policy.

High coverage amount

Critical illness policy provides coverage of up to Rs. 50 lakh to give you access to the required medical treatment without worrying about expenses.

Lump sum payout

Critical illness policies usually offer a lump sum payout to the policyholder when the illness is diagnosed so that treatment charges can be taken care of.

Tax exemptions

Claim tax deductions on the premium paid for a critical illness covered under Section 80D of the Income Tax Act of 1961. Those below the age of 60 years can claim up to Rs. 25,000. Additionally, senior citizens over 60 years old can claim up to Rs. 50,000 under this section. The amounts may vary depending on the prevalent tax regime.

Easy claim processing

Critical illness insurance plans typically offer straightforward and hassle-free claim processing, allowing policyholders to access funds quickly and efficiently when diagnosed with a covered condition, ensuring timely financial support.

Waiting period

Most critical illness insurance policies include a waiting period, usually ranging from 30 to 90 days after the policy begins, during which claims cannot be made. Understanding this period is essential for proper planning.

Loss of income

Critical illness insurance can provide financial relief for loss of income due to serious health issues. This coverage helps policyholders manage living expenses while recovering from illnesses that prevent them from working.

How to choose the critical illness insurance plan: A step-by-step guide

Buying any health insurance policy requires you to carefully analyse the policy details to ensure that there are no hidden fees and chargers, and you get maximum coverage at reasonable premium. Given below are the key things to remember when opting for a critical care insurance policy:

Inclusions and exclusions

You must go through the inclusions and exclusions of the critical illness insurance policy. There can be instances where a policy may not cover the expenses for an illness that you consider a critical health condition.

Calculate premium rates

When choosing a critical illness insurance plan, start by calculating premium rates based on your age, health status, and coverage amount. Compare quotes from multiple insurers to find a plan that fits your budget while providing adequate coverage.

Find out the covered illnesses

Review the list of covered illnesses in each plan. Ensure that the policy includes major conditions like cancer, heart attack, and stroke. Understanding what is covered helps you select a plan tailored to your specific health concerns and risks.

Sum insured

Consider the sum insured while checking different policy options. As the cost of treatment varies for different critical illnesses, checking the coverage amount becomes imperative before applying.

Claim settlement ratio

Check the claim settlement ratio in health insurance of the insurer. The ratio indicates the number of claims the insurer has settled in a year.

Waiting period

The waiting period is the stipulated time after which a policyholder can avail of the benefits of the insurance policy. Check all the waiting periods mentioned in the document to be sure about when claims can be raised and will be accepted.

Advantages of critical illness insurance

Critical illness insurance provides financial protection by paying a lump sum upon diagnosis of serious conditions like cancer, heart attack, or stroke. This coverage helps cover medical expenses, rehabilitation costs, and loss of income during recovery, offering peace of mind and financial stability during challenging times.

Tax benefits under a critical illness insurance policy

The fact that critical illness insurance offers tax benefits is an additional advantage, and you can claim tax deductions against the premium paid under the relevant sections of the prevalent tax laws.Tax benefits under a critical illness insurance policy allow you to claim deductions on premiums paid under Section 80D of the Income Tax Act, reducing your taxable income and providing financial relief while securing your health.

Importance of critical illness insurance in India

One of the most important benefits of this health insurance plan is the enhanced coverage. It covers a wide range of critical illnesses and helps the insured manage all associated healthcare expenses besides hospitalisation costs. critical illness health policy also offers a lump-sum amount that helps individuals manage healthcare costs in a better way.

How does critical illness insurance work?

Critical illness insurance, often referred to as critical illness cover, functions as a policy where the policyholder pays regular premiums to an insurance provider. In the unfortunate event that the insured individual is diagnosed with a predefined critical illness, a waiting period typically applies.

After this waiting period, the policy offers a tax-free lump-sum payout. This financial support can be utilised to cover medical expenses, debts, or any other financial obligations. The extent of critical illness policy coverage varies based on the specific critical illnesses listed in the policy.

Typically, once a successful claim is processed, the policy terminates, offering crucial financial protection alongside traditional health insurance.

Also, read: Family Health Insurance 

Critical illness insurance plan vs Health insurance plan

Below is a comparison of critical illness insurance plans and health insurance plans:

Aspects

Critical illness insurance

Health insurance

Purpose

Provides a lump-sum payout upon diagnosis of specific critical illnesses, such as cancer or heart disease.

Covers a broader range of medical expenses, including hospitalisation, doctor visits, and preventive care.

Coverage

Covers a limited number of critical illnesses specified in the policy, offering financial support during severe health crises.

Offers comprehensive coverage for a wide range of medical expenses, including routine and emergency healthcare.

Premium

Lower in comparison to health insurance policies.

Higher as it offers extensive coverage for healthcare needs.

Pay-out

One-time lump sum payment upon diagnosis of a covered critical illness.

Reimburses actual medical expenses up to policy limits.

Policy termination

Terminates after a successful claim.

Continues to provide coverage for other illnesses and medical expenses even after a claim is made

Pro Tip

Avail hospitalisation and treatment benefits with health insurance plans starting at just Rs. 15*/day.

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Who should buy a critical illness insurance policy?

Also, read: Health insurance for senior citizens

Inclusions of Critical Illness Insurance policy

Here are the standard inclusions under critical illness policy:

  • Critical illness health insurance mainly covers max up to 50 major critical illnesses. Some of these are coronary artery bypass surgery, stroke, kidney failure, major organ transplant, etc.
  • The critical illness cover amount varies depending upon the insurance provider.
  • You can benefit from critical illness insurance within 30 days of diagnosis or as mentioned in the terms and conditions of the critical illness insurance policy.
  • The insured gets the lump-sum amount as mentioned in the critical illness policy.
  • The critical illness insurance policy also covers annual health check-ups.
  • Cancer (up to a specified stage)
  • First-time heart attack
  • Open-heart coronary artery bypass graft
  • Open-heart heart valve replacement or repair
  • Coma of specified severity
  • Kidney failure requiring regular dialysis
  • Stroke
  • Major organ transplant
  • Bone marrow transplant
  • Permanent limb paralysis
  • Motor neuron disease (ALS)
  • Multiple sclerosis
  • Aplastic anemia
  • Bacterial meningitis
  • Loss of speech
  • End-stage liver disease
  • Deafness
  • End-stage lung disease
  • Fulminant viral hepatitis
  • Major burns
  • Muscular dystrophy

Exclusions of critical illness insurance policy

Here are the standard exclusions under the critical illness policy:

  • There is no compensation if a person dies within 30 days of diagnosis of critical illness or surgery.
  • Any critical illness developed due to smoking, tobacco, alcohol, or drug intake is not included in the policy.
  • The critical illness developed due to internal or external congenital disorder is not included in critical illness insurance.
  • Pregnancy or childbirth-related critical conditions are not covered under critical illness insurance.
  • Adventure sports injuries, self-harm, and war injuries are not included in the critical illness policy.
  • Critical illness diagnosed during the waiting period
  • Death occurring within 30 days of critical illness diagnosis or surgery
  • Illness arising from smoking, alcohol, tobacco, or drug use
  • Critical illness caused by congenital internal or external disorders
  • Conditions related to pregnancy or childbirth complications
  • HIV/AIDS-related illnesses
  • Dental care, cosmetic surgery, infertility, or hormone replacement treatments, and treatments conducted outside India

The need for a critical illness policy

A critical illness policy is essential to protect against the financial burden of serious medical conditions like cancer, heart attack, or stroke. Such illnesses often require costly treatments and extended recovery time, during which income may be lost. A critical illness policy provides a lump-sum payout, helping cover medical expenses, daily living costs, and other financial commitments.

Who can benefit from critical illness insurance plan?

A critical illness insurance plan benefits anyone concerned about financial stability during serious health crises. It's particularly advantageous for individuals without sufficient savings or those seeking additional coverage beyond standard health insurance. This coverage ensures financial support for medical treatments, daily expenses, and other costs associated with critical illnesses, offering peace of mind during challenging times.

How to file a claim for critical illness policy?

Here are the complete process for the Claim Process for Critical Illness Insurance Policy:

Cashless claim

You get cashless treatment facility at the insurer’s network hospitals. Here you do not have to deal with any paperwork. The network hospital will take care of the entire claim process. You simply have to follow the below procedure.

  • Approach the network hospital with your policy details.
  • The hospital will verify your details and send a pre-authorisation form to the insurer.
  • The insurer will verify the pre-authorisation request and convey the policy coverage and other details to the hospital.

Planned hospitalisation

  • Insured members should intimate about admission at least 72 hours before.
  • In the case of emergency hospitalisation, the insured member or his representative should intimate such admission within 24 hours.
  • The insurer will send you or the network hospital a pre-authorisation letter. The pre-authorisation letter, ID card issued to you along with this policy, and any other information or documentation that the insurer has specified must be produced to the network hospital identified in the pre-authorisation letter at the time of your admission to the same.
  • If the procedure above is followed, you will not be required to directly pay for the medical expenses above the aggregate deductible in the network hospital.
  • Original bills and evidence of treatment in respect of the same shall be left with the network hospital.

Reimbursement claim

If the insurer denies pre-authorisation under the cashless claim procedure mentioned above in a critical illness insurance policy. Or if the treatment taken is in a hospital other than a network hospital or if you do not wish to avail of the cashless facility, then the following procedure must be followed:

 

  • You or someone claiming on your behalf must inform the insurer in writing immediately within 48 hours of hospitalisation and gather all the hospital documents.
  • In the event of the insured person’s death, someone claiming on their behalf must inform the insurer (in writing) immediately and send a copy of the post-mortem report (if any) within 30 days.
  • The insurer shall not indemnify you for any period of hospitalisation of fewer than 24 hours, except for day-care procedures.

Also check: What is Medical Reimbursement?

Frequently asked questions

What does critical illness insurance do?

Critical illness insurance provides financial protection to individuals diagnosed with a serious illness. It pays out a lump sum to the policyholder to cover medical expenses, lost income, or any other costs related to their illness.

What are examples of critical illness cover?

Common examples of critical illness cover include cancer, heart attack, stroke, organ failure, and other life-threatening conditions. The specific illnesses covered may vary depending on the insurance provider.

What is the best critical illness insurance for you?

The best critical illness insurance policies are those that offer comprehensive coverage for a wide range of medical conditions, with reasonable premiums and flexible payment options. It is important to compare policies and providers to find the best fit for your needs.

Should we buy critical illness cover?

Critical illness cover can provide valuable financial security for individuals and families facing a serious medical diagnosis. It is worth considering for anyone with dependent family members, significant financial obligations, or concerns about covering medical expenses and lost income.

How do I buy a critical illness policy?

To buy a critical illness policy, you will need to research insurance providers and policies, compare prices and coverage options, and apply for coverage. You can typically apply directly through the insurance company or choose a policy from online insurance marketplaces. Be sure to read and understand the policy terms and conditions before purchasing.

Which is better life insurance or critical illness?

Critical illness and life insurance are two different types of insurance policies that serve different purposes. Life insurance is intended to provide financial support to your beneficiaries after your death, while critical illness insurance protects you in the event of a serious illness diagnosis. Both types of insurance can be valuable as part of a comprehensive financial plan.

What are the eligibility criteria for purchasing critical illness insurance?

To purchase critical illness insurance, individuals typically need to meet certain eligibility criteria, including being within a specified age range, generally between 18 and 65 years old, and in good health without pre-existing critical illnesses.

Do I need to undergo medical tests to avail critical illness cover?

Whether medical tests are required to avail critical illness cover depends on various factors, including your age, health condition, and the sum assured. In some cases, insurers may require medical tests to assess your health status and determine eligibility.

What is the sum insured of critical illness insurance cover?

The sum insured of critical illness insurance cover typically varies based on individual preferences and insurance providers. It can range from a few lakhs to several crores, depending on factors such as age, health status, and financial requirements.

What is critical illness cover in health insurance?

Critical illness cover in health insurance provides a lump-sum payout upon diagnosis of severe illnesses listed in the policy. It helps cover expenses beyond regular health insurance, such as treatment costs, loss of income, and lifestyle adjustments during recovery.

What are the 13 critical illnesses?

The 13 critical illnesses typically include cancer, heart attack, stroke, major organ transplant, kidney failure, coronary artery bypass surgery, paralysis, and others depending on the insurer. Each illness must meet specific criteria outlined in the policy for the claim to be valid.

What are 36 critical illnesses?

The 36 critical illnesses typically covered include conditions like cancer, heart attack, stroke, major organ transplants, kidney failure, and paralysis. The exact list may vary by insurer but usually includes severe, life-threatening diseases requiring extensive treatment and care.

Is diabetes a critical illness?

Diabetes is not usually classified as a critical illness itself, but complications arising from diabetes, such as kidney failure or heart disease, can be considered critical illnesses under some insurance policies. Always check the specific conditions covered in your policy.

Is kidney failure a critical illness?

Yes, kidney failure is classified as a critical illness. It requires life-saving treatments such as dialysis or a kidney transplant, which are often expensive. Critical illness insurance can provide financial support for managing the costs of kidney failure treatments.

How long does critical illness cover last?

Health insurance with critical illness cover provides comprehensive protection, offering a lump-sum payout for specific severe conditions like cancer or heart disease. Critical illness cover typically lasts for the duration of the policy, which can range from 10 to 30 years, depending on the insurer. It may also be part of a term insurance plan that lasts until a certain age or policy maturity.

What are the disadvantages of critical illness insurance?

The disadvantages of critical illness insurance include high premiums, limited coverage to specific conditions, and a strict claim process. Additionally, some policies may have long waiting periods and exclusions, such as pre-existing conditions or illnesses related to lifestyle habits.

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