Buy Critical Illness Insurance Cover

Importance of a critical illness insurance policy

Critical illness insurance policy offers coverage against life-threatening diseases such as cancer, heart attack, renal failure etc.

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. These insurance policies not only give you financial security but also helps you focus on your treatment and recovery.

What is critical 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.

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

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.

Things to keep in mind while opting for a critical illness policy

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 illness 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.

  • 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.

  • 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.

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.

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. A critical illness insurance plan also offers a lump-sum amount that helps individuals manage healthcare costs in a better way.

How critical illness insurance works?

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 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.

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


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 and should opt for a critical illness insurance plan to save themselves from financial burdens during demanding times.

  • 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.

  • Primary earners 
    Those who are the main bread-earners for their respective families must consider opting for this policy to cut down on their financial worries due to any critical health condition.

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.

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.

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.

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.

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